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N THE RISEU N I V E R S I T Y O F F LO R I DA A N N U A L F I N A N C I A L R E P O R T | 2 0 1 8 - 2 0 1 9

F O R T H E F I S C A L Y E A R E N D E D J U N E 3 0 , 2 0 1 9

UNIVERSITY OF FLORIDA ANNUAL FINANCIAL REPORT

C O N T E N T S

4 University Overview

6 Introduction from the Vice President and Chief Financial Officer

8 Independent Auditor’s Report on Financial Statements

10 Management’s Discussion and Analysis

18 Basic Financial Statements

18 Statement of Net Position

20 Statement of Revenues, Expenses, and Changes in Net Position

21 Statement of Cash Flows

22 Notes to the Financial Statements

53 Other Required Supplementary Information

56 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters

58 University of Florida Board of Trustees

MISSION

The University’s mission is to enable students to lead and influence the next generation and beyond for economic, cultural, and societal benefit by striving to offer broad-based, inclusive public education, leading research, and public service. The fusion of these three endeavors stimulates a remarkable intellectual vitality and generates a synthesis that represents the University’s greatest strength. Education is a fundamental purpose of the University at both the graduate and undergraduate levels. Research and scholarship are integral to the education process and to the expansion of our understanding of the natural world, the intellect, and the senses. Service reflects the University’s obligation to share the benefits of its research and knowledge for the public good. These three interlocking elements span all academic disciplines and represent the University’s commitment to lead and serve by pursuing and disseminating new knowledge while building upon the experiences of the past. The University of Florida aspires to advance by strengthening the human condition and improving the quality of life.

HISTORY The University of Florida, the State’s oldest university, traces its beginning of rich history to 1853, when the state-funded East Florida Seminary acquired the Kingsbury Academy in Ocala. After the end of the Civil War, the institution relocated to Gainesville, ultimately consolidated with the State’s land grant Florida Agricultural College and was renamed the University of Florida in 1906. At the time, the University was an all-male institution with only 102 students. Until 1947, the University of Florida was one of only three State universities, along with the Florida State College for Women (now Florida State University) and Florida A&M University. Women attended as early as 1916, and the student body grew to 601 women and 8,177 men when the Legislature removed all barriers for female enrollment in 1947. Today, the University is one of the largest in the nation, boasting an enrollment of more than 56,000 students. The campus consists of 2,000 acres and more than 1,000 buildings, including the first Leadership in Energy and Environmental Design (LEED) Platinum-certified building in the state of

The University of Florida is a comprehensive learning institution built on a land-grant foundation. We are the Gator Nation, a diverse community dedicated to excellence in education and research and

shaping a better future for Florida, the nation, and the world.

UNIVERSITY OF FL RIDA

4 | UNIVERSITY OF FLORIDA

UNIVERSITY OF FL RIDA

Florida. The University is comprised of 16 colleges, offers almost 100 bachelor programs and over 200 masters, doctoral, and professional programs. The University’s programs and facilities span more than 180 locations around the State and the globe. FACULTY

The University faculty, which numbers over 6,000, has over 48 Eminent Scholar Chairs and 45 elections to the National Academies of Science, Engineering, and Medicine or to the American Academy of Arts and Sciences. Present and past faculty include Pulitzer Prize winners, a pioneer in aviation engineering, a leading scholar on econometrics, three winners of NASA’s top award for research, one of the four charter members of the Solar Hall of Fame, and a winner of the Smithsonian Institution’s award for conservation. From pharmacy and public relations to pain mitigation and materials engineering, the University of Florida is a recognized leader in a wide variety of specialties and areas. University researchers and scientists have made significant developments and discoveries in many fields, including astronomy, microbiology, metallurgy, and medical technology. RESEARCH

The University of Florida is a world leader in research, contributing significantly to nearly every field of endeavor. Since 1985, the University of Florida has been a member of the Association of American Universities, which is comprised of 65 leading research universities in the United States and Canada. To date, the University of Florida is the only member university located in Florida. University researchers have pioneered new therapies and better treatments in the fights against aging and disease. They have developed renewable energy sources that offer great promise in reducing our dependence on fossil fuels, as well as engineered healthier foods, developed more energy-efficient and sustainable construction techniques, and established better ways to protect the environment.

Through the years of research, University of Florida scientists, inventors, engineers, and researchers have developed products and practices that have been distributed and applied with an international reach, improving the lives of millions of people in Florida and around the world. STUDENTS

The University of Florida’s freshman retention rate of 96 percent speaks to the outstanding quality of the University’s entire academic experience. Fall 2018 figures indicate an enrollment of over 56,000 students, almost 80 percent of whom are from Florida. Almost every state in the nation is represented in the University of Florida student body, and the University has a large international enrollment, with over 4,400 international students representing more than 150 countries. Sixty-seven percent of enrolled students are degree-seeking undergraduates, 21 percent are graduate students and seven percent are in a professional degree program, with the remaining five percent consisting of unclassified or non-degree seeking undergraduates. University of Florida students also receive many opportunities to participate in extracurricular activities. There are more than 1,000 student organizations on campus, and students attend more than 2,000 campus concerts, art exhibits, theatrical productions, guest lectures, sporting events, as well as other events each year. The University of Florida is ranked 7th (tied) among public colleges and universities in the U.S. News Best Colleges (2020 ed.) and ranks 2nd in Kiplinger’s “Best Public College Values” (2019) and 10th in Forbes “Best Value Public Colleges” (2019). Additionally, UF is ranked 6th in Washington Monthly National Universities (2019), 12th in the Wall Street Journal/Times Higher Education U.S. public ranking (2020 ed.), and 3rd in the Milken Institute’s ranking of Best Universities for Technology Transfer (2017). The University’s consistent ranking among the nation’s top universities is a result of the commitment to provide the highest quality education at the best value.

A COMPONENT UNIT OF THE STATE OF FLORIDA | 5

2018-2019 | ANNUAL FINANCIAL REPORT

INTRODUCTION FROM THE

VICE PRESIDENT AND CHIEF FINANCIAL OFFICER


I AM PLEASED TO PRESENT the University of Florida’s Annual Financial Report for the fiscal year ending on June 30, 2019. This report provides timely, useful information about the University’s financial activities, status and well-being in the past fiscal year.

The mission of the Office of the Vice President and Chief Financial Officer is to provide leadership in financial planning, decision making and process improvement. We are continually seeking ways to provide financial support and guidance to the campus community and collaborate with partners across UF.

Here are some highlights from the year:

• The University made great strides in the 2019 fiscal year, rising to its highest ranking ever as the No. 7 public university as reported in US News and World Report. Ranking factors include: undergraduate academic reputation, graduation and retention rates, faculty resources, student selectivity, financial resources, and alumni giving. It is a great honor to be recognized as one of the country’s very best public universities and we look forward to continued success.

• The University is committed to bringing the world’s best talent to UF through the Faculty 500 initiative. This ongoing initiative to appoint an additional 500 faculty members to the University will increase our excellence in research and reduce student-faculty ratio and class sizes. The first wave of faculty joined the UF community in the fall 2018 semester and has brought their knowledge largely to the College of Liberal Arts, Engineering, and Agricultural and Life Sciences.

• Research funding continues to be a major component of the University’s operating revenues, totaling an impressive $776 million for the fiscal year 2019 despite an increasingly competitive funding environment. The largest recipients were the College of Medicine - Gainesville ($284 million), the Institute of Food and Agricultural Sciences ($161 million), the College of Engineering ($90 million), and the College of Liberal Arts & Sciences ($40 million).

• The University is on pace to meet the $3 billion mark ahead of schedule of its Go Greater fundraising campaign. At this point, over $2.18 billion has been raised through the generosity of donors who believe in supporting the University’s

mission. During the fiscal year 2019, contributions reached a record amount of $526 million in a single year. The Go Greater campaign is focused on four broad areas: health, environment, innovation, and globalization. These funds, and the earnings generated from UF’s endowment, help provide the resources to reach the level of excellence we seek and foster recognition of the University’s world-class achievements in learning, discovery, engagement, and economic development.

• The Office of the CFO created a new unit called the Continuous Improvement Office tasked with building a culture of continuous improvement across the University. The Continuous Improvement model is the foundation of formal techniques such as Lean, Six Sigma, Agile and others. Areas such as foreign national hiring and payroll emergency checks have already made progress by streamlining processes, improving work quality, conserving resources and boosting morale.

• Other highlights from the CFO Division include the modernization of the Finance and Accounting website, enhanced training courses, new guides and resources for campus fiscal employees, and the receipt of Annual Achievement of Excellence in Procurement Award from the National Procurement Institute (NPI) for the sixth consecutive year by UF Procurement.

In addition to the highlights and business process improvements noted above, construction continued during fiscal year 2019 on several major projects, including a new parking facility, the Wertheim Laboratory for Engineering Excellence, the new UF Gator Baseball Stadium, and the College of Education’s Norman Hall Rehabilitation and Center Addition. I encourage you to read the following report to learn more about the financial health and activities of the University of Florida – the state of Florida’s oldest and most comprehensive university – a place dear to us all and where preeminence thrives.

Most cordially,

Michael V. McKeeVice President and Chief Financial Officer



Phone: (850) 412-2722Fax: (850) 488-6975

Sherrill F. Norman, CPAAuditor General

AUDITOR GENERALSTATE OF FLORIDAClaude Denson Pepper Building, Suite G74

111 West Madison StreetTallahassee, Florida 32399-1450

The President of the Senate, the Speaker of theHouse of Representatives, and the

Legislative Auditing Committee

INDEPENDENT AUDITOR’S REPORT

Report on the Financial Statements

We have audited the accompanying financial statements of the University of Florida, a component unit of the State of Florida, and its aggregate discretely presented component units as of and for the fiscal year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the University’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the aggregate discretely presented component units, which represent 100 percent of the transactions and account balances of the aggregate discretely presented component units columns. Those statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for the aggregate discretely presented component units, is based solely on the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the University of Florida and of its aggregate discretely presented component units as of June 30, 2019, and the respective changes in financial position and, where applicable, cash flows thereof for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America.


Emphasis of Matter

As discussed in Notes 2. and 3. to the financial statements, three discretely presented component units changed from the Financial Accounting Standards Board accounting and financial reporting framework to the Governmental Accounting Standards Boardaccounting and financial reporting framework. This affects the comparability of amounts reported by the component units for the 2018-19 fiscal year with amounts reported for the 2017-18 fiscal year. Our opinion is not modified with respect to this matter.

Other Matters

Required Supplementary InformationAccounting principles generally accepted in the United States of America require that MANAGEMENT’S DISCUSSION AND ANALYSIS, the Schedule of University’s Proportionate Share of the Total Other Postemployment Benefits Liability, Schedule of University’s Proportionate Share of the Net Pension Liability – Florida Retirement System (FRS) Defined Benefit Pension Plan, Schedule of University Contributions – Florida Retirement System (FRS) Defined Benefit Pension Plan, Schedule of the University’s Proportionate Share of Net Pension Liability – Health Insurance Subsidy (HIS) Defined Benefit Pension Plan, andSchedule of University Contributions – Health Insurance Subsidy (HIS) Defined Benefit Pension Plan be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other InformationOur audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the University of Florida’s basic financial statements. The University Overview and the Introduction from the Vice President and Chief Financial Officer, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The University Overview and the Introduction from the Vice President and Chief Financial Officer have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Report on Partial Comparative InformationWe have previously audited the University of Florida’s 2017-18 fiscal year financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated February 7, 2019. In our opinion, the partial comparative information presented as of and for the fiscal year ended June 30, 2018, is consistent, in all material respects, with the audited financial statements from which it has been derived.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated February 6, 2020, on our consideration of the University of Florida’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, rules, regulations, contracts, and grant agreements and other matters included under the heading INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the University of Florida’s internal control over financial reporting and compliance.

Respectfully submitted,

Sherrill F. Norman, CPATallahassee, FloridaFebruary 6, 2020Audit Report No 2020-114



FOR THE FISCAL YEAR ENDED JUNE 30, 2019

MANAGEMENT’S DISCUSSION & ANALYSIS


The Management’s Discussion and Analysis (MD&A)

provides an overview of the financial position and

activities of the University of Florida (the University) for

the fiscal year ended June 30, 2019, and should be read in

conjunction with the financial statements and notes thereto.

MANAGEMENT’S DISCUSSION & ANALYSIS


THE UNIVERSITY OF FLORIDA (the University) is a component unit of the State of Florida and one of only 17 universities in the country to have the distinction of land, sea and space grant status. As the State’s flagship university, it is the only Florida institution to belong to the prestigious Association of American Universities. In addition, the University is one of only six in the country with colleges of law, medicine, agriculture, and veterinary medicine on one central campus, as well as undergraduate and graduate degrees available via distance and online learning. For the third year in a row, the University of Florida rose in the U.S. News & World Report rankings, based on up to fifteen key measures of quality, once again remaining the most highly ranked university in Florida and the only university in the state in the top 10. As the University continues to climb, it remains highly accessible to students, offering almost 100 undergraduate degrees and more than 250 graduate degrees, with an affordable tuition that allows nearly two-thirds of the University’s graduates to leave with no student loan debt.

The University of Florida’s student population of over 56,000 makes it an integral part of Gainesville, a town of approximately 140,000 residents and the University’s host city. The University of Florida has adopted a strategic development plan which seeks to shape the University and the surrounding community’s future over the next 40 to 50 years. The plan was developed with an exploration of key issues within the university community and the City of Gainesville, and will further the University’s goals of maintaining its status as a preeminent university and a leading research institution.

The financial reporting entity for the financial statements includes the University and its component units. Note 1 to the financial statements provides detailed information on the financial reporting entity and discretely presented component units.

This overview is required by Governmental Accounting Standards Board (GASB) Statement No. 35, Basic Financial Statements – and Management’s Discussion and Analysis – for Public Colleges and Universities, as amended by GASB Statements Nos. 37 and 38. The MD&A, financial statements, and notes thereto, are the responsibility of University management. The MD&A contains financial activity of the University for the fiscal years ended June 30, 2019, and June 30, 2018.

Financial Highlights

The University continues to maintain and protect its strong financial position, with assets of $4.3 billion at June 30, 2019. This reflects a $308.5 million, or 7.8%, increase from the 2017-18 fiscal year. This increase in assets had two main

drivers. The first main driver was an increase in capital assets of $72.5 million, primarily due to additional work in progress, as the University continues to invest in updated facilities, including modern research laboratories and classrooms, in support of the University’s strategic plan.

The second main driver of the increase in assets was an increase in total investments of $167.5 million. The primary investment objective of the University is the safety of the University’s principal and liquidity. Secondary to this responsible financial stewardship is the optimization of investment income. The University succeeded in both objectives during the fiscal year, maximizing the use of available funds in a prudent manner.

While total assets increased, liabilities also increased by $83.4 million, or 3.6%, totaling $2.4 billion at June 30, 2019, primarily due to the issuance of capital improvement debt to fund the construction of a new parking facility on campus and additional amounts due to component units.

Net position represents the residual interest in the University’s assets and deferred outflows of resources after deducting liabilities and deferred inflows of resources. The University’s net position increased by $157.8 million, resulting in a year-end balance of $1.9 billion.

The University of Florida has a strong and diverse revenue base. Operating revenues, which are revenues generated by the University in fulfilling its instruction, research, and public service missions, totaled $2.0 billion for the 2018-19 fiscal year, representing a 3.6% increase over the 2017-18 fiscal year. Major components of operating revenues are Student Tuition and Fees and Grants and Contracts.

Student Tuition and Fees, net of Scholarship Allowances, decreased by $20.9 million, or 5.3%, primarily due to an increase in Scholarship Allowances of $16.6 million. The State of Florida increased the funding for the Florida Bright Futures Scholarship Program, a scholarship program based on high school achievement, to assist Florida students in obtaining an affordable education. There are over 24,000 Florida Bright Futures Scholars at the University of Florida, and 93% of incoming in-state Freshmen receive the award. The State’s increased funding, which led to the increase in Scholarship Allowances, continues to support the University’s commitment to provide the highest quality education at the best value for its students.

The University of Florida is recognized by U.S. News & World Report as one of the Top 10 public research universities in the United States and, as such, growth in Grants and Contracts revenue is essential to the University’s success in fulfilling its mission. The increase in revenues from Grants and Contracts of $91.1 million, or 6.7%, reflects the continued success of the

OtherRevenues

3%

MD&A


University’s faculty in securing competitive research funding. As the University continues to execute the Faculty 500 hiring initiative, the addition of this new talent will enhance innovation, teaching and research, providing graduate and undergraduate students an opportunity to work with these top scholars and researchers as part of their educational experience.

The following chart provides a graphical presentation of the University’s total revenues by category for the 2018-19 fiscal year:

Operating expenses totaled $3.2 billion for the 2018-19 fiscal year, representing a $174.6 million, or 5.7%, increase compared to the 2017-18 fiscal year. The largest category contributing to this increase was Employee Compensation and Benefits, underlining the University’s commitment toward recruiting and retaining exceptional faculty and staff to enable preeminence.

State Appropriations, Investment Income, Net, and Noncapital Grants, Contracts, and Gifts are all considered nonoperating revenues as they are not generated by the University’s primary, ongoing operations. Net nonoperating revenues and expenses in the 2018-19 fiscal year increased $134.9 million primarily due to increases in Noncapital Grants, Contracts, and Gifts ($58.1 million), reflecting strong support provided to the University by its direct support organizations, and Net Increase in the Fair Value of Investments ($31.7 million) resulting from favorable market conditions.

Overview of Financial Statements

Pursuant to GASB Statement No. 35, the University’s financial report includes three basic financial statements: the Statement of Net Position; the Statement of Revenues, Expenses, and Changes in Net Position; and the Statement of Cash Flows. The financial statements and notes thereto encompass the University and its component units.

The Statement of Net Position reflects the assets, deferred outflows of resources, liabilities, and deferred inflows of resources of the University by employing the accrual basis of accounting, and presents the financial position of the University at a specified time. Net position, the difference between total assets and deferred outflows of resources and total liabilities and deferred inflows of resources, is one indicator of the University’s current financial condition. The changes in net position that occur over time indicate improvement or deterioration in the University’s financial condition.

The Statement of Revenues, Expenses, and Changes in Net Position represents the University’s revenue and expense activity, categorized as operating and nonoperating. Revenues and expenses are recognized when earned or incurred, regardless of when cash is received or paid. GASB Statement No. 35 categorizes revenues and expenses as either operating or nonoperating. Operating revenues generally result from exchange transactions where each of the parties to the transaction either gives or receives something of equal or similar value.

The majority of the University’s expenses are operating expenses as defined by GASB Statement No. 35. GASB gives financial reporting entities the choice of reporting operating expenses in the functional or the natural classifications. The University has chosen to report the expenses in their natural classification on the Statement of Revenues, Expenses, and Changes in Net Position and has displayed the functional classification in the Operating Expenses table and in the notes to the financial statements.

Certain revenue sources that the University relies on to provide funding for operations, including State Noncapital Appropriations, certain gifts and grants, and investment income, are defined by GASB as nonoperating. Nonoperating expenses include capital financing costs and other costs related to capital assets.

Other Revenues are composed of State Capital Appropriations and Capital Grants, Contracts, and Donations.

The Statement of Cash Flows provides information about the University’s financial results by reporting the major sources and uses of Cash and Cash Equivalents. This statement assists in evaluating the University’s ability to generate net cash flows, its ability to meet its financial obligations as they come due, and its need for external financing. Cash flows from operating activities reflect the net cash used by the operating activities of the University. Cash flows from capital and related financing activities include activities of the capital funds and related long-term debt. Cash flows from investing activities reflect the net source and use of cash related to the purchases and sales of investments and

3%

OtherRevenues

3%

Operating Revenues

TOTAL REVENUES 2018-19

38%

59%

Net NonoperatingRevenues



income earned on those investments. Cash flows from noncapital financing activities include those activities not covered in the other sections.

The University’s basic financial statements include discretely presented component units categorized as follows:

Direct-Support Organizations are separate, not-for-profit corporations organized and operated exclusively to assist the University in achieving excellence by providing supplemental resources from private gifts, bequests, and valuable education support services.

Health Science Center Affiliates are the several corporations closely affiliated with the University of Florida J. Hillis Miller Health Science Center, including the Faculty Practice Plans.

Shands Hospital and Others includes Shands Teaching Hospital and Clinics, Inc., a not-for-profit corporation that is contractually obligated to manage, operate, maintain, and insure the hospital facilities in support of the programs of the Health Science Center at the University of Florida. In addition, this category includes the University of Florida Self-Insurance Program and the University of Florida Healthcare Education Insurance Company.

Statement of Net Position

The following table summarizes the University’s assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position at June 30:

Condensed Statement of Net Position (in millions)

2019 2018

Assets:

Current Assets $ 1,914.6 $ 1,723.1

Capital Assets, Net 2,020.0 1,947.5

Other Noncurrent Assets 352.4 307.9

Total Assets 4,287.0 3,978.5

Deferred Outflows of Resources 335.2 314.8

Total Assets and Deferred Outflows of Resources 4,622.2 4,293.3

Liabilities:

Current Liabilities 470.6 425.6

Noncurrent Liabilities 1,960.7 1,922.3

Total Liabilities 2,431.3 2,347.9

Deferred Inflows of Resources 277.2 189.5

Total Liabilities and Deferred Inflows of Resources 2,708.5 2,537.4

Net Position:

Net Investment in Capital Assets 1,883.9 1,800.3

Restricted 283.4 206.9

Unrestricted (253.6) (251.3)

Total Net Position $ 1,913.7 $ 1,755.9

The increase in assets resulted primarily from an increase in depreciable and nondepreciable capital assets as well as total investments, which increased by $72.5 million and $167.5 million, respectively. The increase in capital assets demonstrates the continued importance placed on providing modern facilities to enhance research and education. Investments grew as a result of the University’s increase in investment income driven by market performance, as well as broader investment of additional revenues from grants, contracts, and donations.

Due from State increased $11.9 million because of new construction commitments from the Department of Education, primarily in support of the University’s new Data Science and Information Technology Building, an interdisciplinary hub focused on the development and application of computing, communication, and cyber technologies to a broad spectrum of areas including health care, security, technology development, and fundamental science. This co-location of research and education activities from the basic sciences, engineering, and health sciences will facilitate cross-disciplinary data science solutions to a vast array of problems and opportunities.

The large increase in current liabilities is primarily due to an increase of $48.1 million in Due to Component Units/University. This is the result of a large investment held on behalf of the University of Florida Research Foundation Inc.

The increase in noncurrent liabilities is primarily due to an increase of $33.2 million in the noncurrent portion of Net Pension Liability. GASB Statement No. 68, Accounting and Financial Reporting for Pensions, requires employers participating in cost-sharing multiple-employer defined benefit pension plans to report the employers’ proportionate share of the net pension liabilities of the defined benefit pension plans. The change in the Net Pension Liability is driven in part by the market performance for the plan assets as of the measurement date for the plan liabilities. Also contributing to the increase in noncurrent liabilities is a $21.1 million increase in the noncurrent portion of Capital Improvement Debt Payable, resulting from the issuance of bonds by the University to finance the construction of a new parking facility on campus. The reported deferred outflows of resources and deferred inflows of resources are also required under GASB Statements No. 68 and No. 75.

Statement of Revenues, Expenses, and Changes in Net Position

The following table summarizes the University’s activity for the 2018-19 and 2017-18 fiscal years:

MD&A


Condensed Statement of Revenues, Expenses,and Changes in Net Position (in millions)

2018-19 2017-18

Operating Revenues $ 2,009.8 $ 1,939.3

Operating Expenses (3,233.5) (3,058.9)

Operating Loss (1,223.7) (1,119.6)

Net Nonoperating Revenues 1,282.6 1,147.7

Income Before Other Revenues 58.9 28.1

Other Revenues 98.9 129.5

Increase in Net Position 157.8 157.6

Net Position, Beginning of Year 1,755.9 2,438.6

Adjustments to Beginning Net Position - (840.3)

Net Position, Beginning of Year, as Restated

1,755.9 1,598.3

Net Position, End of Year $ 1,913.7 $ 1,755.9

The University continues to maintain and grow a diverse revenue stream which serves to protect the University from over-reliance on one source of revenues. This contributed to an increase in net position of $157.8 for the 2018-19 fiscal year despite an increase in operating expenses.

Operating Revenues

The following table summarizes the operating revenues by source that were used to fund operating activities during the 2018-19 and 2017-18 fiscal years:

Operating Revenues (in millions)

2018-19 2017-18

Grants and Contracts $ 1,442.0 $ 1,350.9

Student Tuition and Fees, Net of Scholarship Allowances 375.0 395.9

Sales and Services of Auxiliary Enterprises

131.4

130.0

Sales and Services of Educational Departments 55.9 57.2

Other 5.5 5.3

Total Operating Revenues $ 2,009.8 $ 1,939.3

Increases in operating revenues during the 2018-19 fiscal year resulted from increases in awards of Nongovernmental Grants and Contracts and Federal Grants and Contracts, which increased by $55.1 million and $38.1 million, respectively. This significant increase was largely due to increased funding from the federal government. The University secured increased funding from several prominent federal agencies, including the US Departments of Health and Human Services, Agriculture, and Defense. The growth in research funding, despite an increasingly competitive funding environment, continues to demonstrate the University’s success in creating and fostering links between researchers and funding opportunities as well as the growing prestige and reputation of the University’s research capabilities in the eyes of collaborators and funding agencies.

Operating Expenses

The following table summarizes the operating expenses for each method of classification for the 2018-19 and 2017-18 fiscal years:

Operating Expenses (in millions)

Natural Classification 2018-19 2017-18

Employee Compensation and Benefits $ 2,271.6 $ 2,150.2 Services and Supplies 577.4 552.2 Scholarships, Fellowships and Waivers * 163.1 144.6 Depreciation 143.1 138.3 Utilities and Communications 78.3 73.6

Total Operating Expenses $ 3,233.5 $ 3,058.9

Functional Classification 2018-19 2017-18

Instruction $ 770.5 $ 734.6 Public Service 742.1 714.1 Research 707.2 676.6 Academic Support 213.7 185.9 Institutional Support 180.5 175.1 Scholarships, Fellowships and Waivers * 163.1 144.6 Depreciation 143.1 138.3 Auxiliary Enterprises 134.0 116.8 Operation and Maintenance of Plant 132.5 128.4 Student Services 46.8 44.5

Total Operating Expenses $ 3,233.5 $ 3,058.9

* Net of Scholarship Allowances of $224.7 million in the 2018-19 fiscal year and $208.0 million in the 2017-18 fiscal year.

Operating expenses grew primarily due to a $121.4 million increase in Employee Compensation and Benefits, which was driven by a rise in the number of faculty and staff working at the University as well as a one-time performance payment granted to University employees during the 2018-19 fiscal year. This increase is in direct alignment with the Faculty 500 hiring initiative and the University’s strategic plan, which includes attracting and retaining talented faculty and staff with a competitive compensation package.

Nonoperating Revenues and Expenses

The following table summarizes the University’s nonoperating revenues and expenses for the 2018-19 and 2017-18 fiscal years:

Nonoperating Revenues (Expenses) (in millions)

2018-19 2017-18

State Noncapital Appropriations $ 790.4 $ 766.1 Federal and State Student Financial Aid 231.2 208.2 Noncapital Grants, Contracts, and Gifts 184.5 126.4 Investment Income, Net of Expenses 49.8 55.2 Net Increase in Fair Value of Investments 32.6 0.9

Loss on Disposal of Capital Assets (0.2) (1.2)

Interest on Capital Asset-Related Debt (6.1) (6.8)

Other Net Nonoperating Revenues (Expenses) 0.4 (1.1)

Net Nonoperating Revenues $ 1,282.6 $ 1,147.7



The increase in Net Nonoperating Revenues of $134.9 million resulted primarily from increases in Noncapital Grants, Contracts, and Gifts, Federal and State Student Financial Aid, and Net Increase in the Fair Value of Investments. The increase in Noncapital Grants, Contracts and Gifts reflects strong support provided to the University by its direct support organizations. The increase in Federal and State Student Financial Aid is due to the additional funding provided by the State for the Florida Bright Futures Scholarship Program. The Net Increase in the Fair Value of Investments is driven by the market performance of the University’s investments during the year, as compared to performance during the previous year.

Other Revenues

The following table summarizes the University’s other revenues for the 2018-19 and 2017-18 fiscal years:

Other Revenues (in millions)

2018-19 2017-18

State Capital Appropriations $ 73.4 $ 57.8

Capital Grants, Contracts, and Donations 25.5 71.7

Total Other Revenues $ 98.9 $ 129.5

The decrease of $30.6 million in Other Revenues is primarily related to a large lump sum of monies received in the prior year from Duke Energy in order to satisfy contractual obligations. No such lump sum payment was received during the 2018-19 fiscal year.

Statement of Cash Flows

The following table summarizes cash flows for the 2018-19 and 2017-18 fiscal years:

Condensed Statement of Cash Flows (in millions)

2018-19 2017-18

Cash Provided (Used) by:

Operating Activities $ (1,050.8) $ (874.3)

Noncapital Financing Activities 1,251.6 1,091.5

Capital and Related Financing Activities (107.7) (104.9)

Investing Activities (86.4) (112.8)

Net Increase (Decrease) in Cash and Cash Equivalents

6.7

(0.5)

Cash and Cash Equivalents, Beginning of Year 6.3 6.8

Cash and Cash Equivalents, End of Year $ 13.0 $ 6.3

Major sources of funds came from Grants and Contracts ($1,385.1 million), State Noncapital Appropriations ($790.4

million), Student Tuition and Fees, Net ($375.4 million), Federal and State Financial Aid ($231.2 million), and Noncapital Grants, Contracts, and Gifts ($184.5 million). Major uses of funds were for Payments to Employees ($2,185.5 million), Payments to Suppliers for Goods and Services ($660.4 million), and the Purchase or Construction of Capital Assets ($203.1 million).

Capital Assets, Capital Expenses and Commitments, and Debt Administration

CAPITAL ASSETS

At June 30, 2019, the University had approximately $4.4 billion in capital assets, less accumulated depreciation of $2.4 billion, for net capital assets of $2.0 billion. Depreciation charges for the current fiscal year totaled $143.1 million. The following table summarizes the University’s capital assets, net of accumulated depreciation, at June 30:

Total Capital Assets, Net (in millions)

2019 2018

Land $ 12.5 $ 12.5

Buildings 1,525.4 1,522.3

Infrastructure and Other Improvements 47.9 51.5

Furniture and Equipment 210.6 204.4

Library Resources 46.4 49.2

Property Under Capital Lease and Leasehold Improvements 13.2 14.4

Other Capital Assets 43.1 36.1

Construction in Progress 120.9 57.1

Total Capital Assets (Nondepreciable and Depreciable, Net) $ 2,020.0 $ 1,947.5

Additional information about the University’s capital assets is presented in Note 9 to the financial statements.

Total Capital Assets increased in the 2018-19 fiscal year as major construction projects to advance the University’s mission, including the Career Resource Center addition and renovation, IFAS Lone Cabbage Oyster Reef Restoration, and Lacy Rabon Plant addition were all completed during the year. The increase in capital assets continues to reflect the University’s dedication to an infrastructure and learning environment that supports its mission and strategic plan.

CAPITAL EXPENSES AND COMMITMENTS

Major capital expenses were incurred during the fiscal year on the University’s largest ongoing projects, including the Herbert Wertheim Laboratory for Engineering Excellence ($22.3 million), Norman Hall Rehabilitation and College of Education

MD&A


Center Addition ($17.9 million), and Parking Garage XIV ($17.0 million), which are expected to transform the learning and research environments of the associated Colleges of Engineering and Education, and support the continued growth of the campus community.

The University’s construction commitments at June 30, 2019, are as follows:

Major Construction Commitments (in millions)

Total Commitments $ 439.8

Completed to Date 120.9

Balance Committed $ 318.9

Additional information about the University’s construction commitments is presented in Note 15 to the financial statements.

DEBT ADMINISTRATION

The University is mindful of its financial stewardship and manages resources effectively, including the prudent use of debt to finance capital projects. At June 30, 2019, the University had $166.9 million in outstanding capital asset-related debt, representing an increase of $19.7 million, or 13.4%, from the prior fiscal year as a result of debt issued to fund construction of a new parking garage in order to make campus more accessible to students and faculty. The following table summarizes the outstanding capital asset-related debt by type of debt at June 30:

Capital Asset-Related Debt (in millions)

2019 2018

Capital Improvement Debt $ 159.5 $ 138.1

Loans and Notes 4.7 5.2

Installment Purchase Agreements 0.5 1.6

Capital Leases 2.2 2.3

Total Capital Asset-Related Debt $ 166.9 $ 147.2

Additional information about the University’s capital asset-related debt is presented in Note 13 to the financial statements.

Economic Factors That Will Affect the Future

The University of Florida remains financially secure and positioned to grow alongside the State of Florida’s economy, one of the strongest in the country. The forecast predicts overall stability for the Florida economy, with growth in several key economic indicators – personal income, job growth, employment, and tourism. With job growth and elevated success in the labor market, the

State’s unemployment rate continues to improve, with a 3.4% rate in July 2019 that was lower than the nation as a whole.

Standard and Poor’s Global Ratings (S&P) issued the University an upgraded rating of AA+ from AA in the previous year and affirmed a stable outlook for the University. The rating’s rationale included stable financial trends, ongoing support from the State, an impressive enterprise profile with diverse programs, affordable tuition rates, and good regional state employment and population growth trends. Although the higher education industry is exposed to risk such as cyclical, competitive, and substitution risks, the industry represents a low credit risk when compared to others. In addition to this upgraded rating issued by S&P, the University maintains an Aa2 rating from Moody’s Investors Services. These strong ratings not only reflect the University’s financial strength and reputation as a leading provider of higher education in the State, but they also continue to allow the University to obtain competitive debt financing to support its mission and realize its strategic plan.

The positive economic conditions and strong State support are reflected in the University’s State Appropriations for the coming fiscal year. The General Revenue and Lottery allocation from the State budget totaled $775.7 million for the 2019-20 fiscal year. As part of that overall allocation, the University receives $16.4 million in National Ranking Operational Enhancement funds, $47.3 million in performance funds and $58.5 million in funding for the preeminence initiative. Furthermore, the budget includes $16.8 million in funding for the World Class Faculty & Scholar Program and $16.7 million in funding for the State University Professional and Graduate Degree Excellence Program. This funding will be used to support the University’s initiative to hire additional faculty in the 2019-20 fiscal year. The 2019-20 fiscal year budget clearly reflects the sustained commitment of the Legislature and the Governor to support the University of Florida in its goal of becoming a top five public research university that the state, nation, and world look to for leadership.

Requests for Information

Questions concerning information provided in the MD&A, financial statements and notes thereto, and other required supplementary information, or requests for additional financial information should be addressed to Alan M. West, Assistant Vice President and University Controller, P.O. Box 113200, Gainesville, Florida 32611.



University of Florida Component Units

2019 2018Direct-Support

Organizations Health Science

Center Affiliates Shands Hospital

and Others

ASSETSCurrent Assets: Cash and Cash Equivalents (Note 1) $ 2,559 $ 1,234 $ 36,788 $ 86,326 $ 121,795 Investments (Note 5) 1,640,768 1,517,714 127,594 45,485 291,520 Accounts Receivable, Net (Note 6) 99,473 89,350 95,511 77,588 362,055 Loans and Notes Receivable, Net (Note 6) 2,549 2,808 - - - Due From State (Note 7) 100,287 88,357 - - 871 Due From Component Units/University (Note 8) 61,241 17,450 206,790 52,074 110,576 Inventories 4,491 3,947 175 - 53,580 Other Current Assets 3,241 2,250 4,659 2,310 98,331

Total Current Assets 1,914,609 1,723,110 471,517 263,783 1,038,728

Noncurrent Assets: Restricted Cash and Cash Equivalents (Note 1) 10,462 5,082 35,634 23,058 29,460 Restricted Investments (Note 5) 172,728 116,222 1,948,172 8,831 599,654 Other Noncurrent Investments (Note 5) 141,308 153,325 - - - Loans and Notes Receivable, Net (Note 6) 27,717 33,143 - - - Depreciable Capital Assets, Net (Note 9) 1,882,135 1,842,199 199,905 82,726 1,190,953 Nondepreciable Capital Assets (Note 9) 137,910 105,330 79,855 27,515 139,868 Other Noncurrent Assets 78 74 15,675 1,657 91,650

Total Noncurrent Assets 2,372,338 2,255,375 2,279,241 143,787 2,051,585

TOTAL ASSETS 4,286,947 3,978,485 2,750,758 407,570 3,090,313

DEFERRED OUTFLOWS OF RESOURCES Deferred Outflows of Pension Resources (Note 11) 309,874 298,571 - - 71,209

Deferred Outflows of Other Postemployment Benefits Payable (Note 11)

16,164

16,260 - -

1,829

Other Deferred Outflows (Note 11) 9,184 - - - 51,301

TOTAL DEFERRED OUTFLOWS OF RESOURCES 335,222 314,831 - - 124,339

TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 4,622,169 $ 4,293,316 $ 2,750,758 $ 407,570 $ 3,214,652

LIABILITIESCurrent Liabilities: Accounts Payable $ 91,269 $ 88,841 $ 34,471 $ 18,571 $ 260,532 Salaries and Wages Payable 51,092 48,455 - 11,648 97,461 Due To Component Units/University (Note 8) 221,822 173,712 125,915 20,078 107,258 Unearned Revenue (Note 12) 58,199 63,846 65,337 2,183 - Deposits Held in Custody 6,165 6,297 12 175 - Other Current Liabilities - - 5,693 - - Long-Term Liabilities - Current Portion: (Note 13) Capital Improvement Debt Payable 9,547 9,302 - - - Bonds Payable - - 6,650 3,182 19,168 Loans and Notes Payable 418 408 1,018 280 - Installment Purchase Agreements Payable 452 1,107 - - 669 Capital Leases Payable 187 176 - 106 2,433 Compensated Absences Payable 11,377 13,215 373 - - Other Postemployment Benefits Payable 15,774 15,774 - - - Net Pension Liability (Note 14) 4,198 4,422 - - - Liability for Self-Insured Claims - - 21,406 - 8,231

Total Current Liabilities 470,500 425,555 260,875 56,223 495,752

Statement of Net PositionAs of June 30, 2019 (amounts expressed in thousands)

BASIC FINANCIAL STATEMENTS




2019 2018Direct-Support



and Others

Noncurrent Liabilities: (Note 13) Capital Improvement Debt Payable $ 149,953 $ 128,813 $ - $ - $ - Bonds Payable - - 119,375 88,699 990,592 Loans and Notes Payable 4,319 4,737 499 7,720 - Installment Purchase Agreements Payable 48 505 - - 1,796 Capital Leases Payable 1,980 2,167 - 224 10,065 Compensated Absences Payable 113,459 112,014 3,375 - - Other Postemployment Benefits Payable 1,027,774 1,053,330 - - 6,471 Net Pension Liability (Note 14) 639,920 606,749 - - - Liability for Self-Insured Claims - - - - 26,064 Other Noncurrent Liabilities 23,286 13,969 54,083 1,685 84,462

Total Noncurrent Liabilities 1,960,739 1,922,284 177,332 98,328 1,119,450

TOTAL LIABILITIES 2,431,239 2,347,839 438,207 154,551 1,615,202

DEFERRED INFLOWS OF RESOURCES Deferred Inflows of Pension Resources (Note 11) 60,653 33,549 432 - 26,709 Deferred Inflows of Other Postemployment Benefits Payable (Note 11) 216,538 155,970 - - 510 Other Deferred Inflows (Note 11) - - 19,140 - 5,426

TOTAL DEFERRED INFLOWS OF RESOURCES 277,191 189,519 19,572 - 32,645

TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 2,708,430 2,537,358 457,779 154,551 1,647,847

NET POSITIONNet Investment in Capital Assets 1,883,887 1,800,313 174,987 33,087 307,259 Restricted: Nonexpendable: Endowment - - 1,362,410 - 276 Expendable: Endowment - - 552,492 - 8,998 Loans 40,117 39,700 - - - Capital Projects 195,724 171,029 - - - Debt Service 5,575 4,289 - - - Other 41,982 (8,110) 11,733 - 190,479 Unrestricted (Note 4) (253,546) (251,263) 191,357 219,932 1,059,793

TOTAL NET POSITION 1,913,739 1,755,958 2,292,979 253,019 1,566,805

TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION

$ 4,622,169 $ 4,293,316 $ 2,750,758 $ 407,570 $ 3,214,652

The accompanying notes are an integral part of these financial statements.





2018-19 2017-18Direct-Support



and Others

OPERATING REVENUES Student Tuition and Fees $ 599,683 $ 603,859 $ - $ - $ - Scholarship Allowances (224,652) (208,007) - - - Student Tuition and Fees, Net of Scholarship Allowances 375,031 395,852 -. -. -. Federal Grants and Contracts 497,867 459,752 -. -. -. State and Local Grants and Contracts 49,871 52,039 -. -. -. Nongovernmental Grants and Contracts 894,253 839,154 -. -. -. Sales and Services of Auxiliary Enterprises 131,381 129,994 -. -. -. Sales and Services of Educational Departments 55,886 57,245 -. -. -. Sales and Services of Component Units -. -. 194,543 -. -. Hospital Revenues -. -. -. 929,882 2,320,100 Gifts and Donations - Component Units -. -. 107,906 -. -. Royalties and Licensing Fees - Component Units -. -. 84,866 -. -. Interest on Loans and Notes Receivable 1,130 1,194 -. -. -. Other Operating Revenues 4,381 4,097 5,537 98,705 45,140

Total Operating Revenues 2,009,800 1,939,327 392,852 1,028,587 2,365,240

OPERATING EXPENSES Employee Compensation and Benefits 2,271,619 2,150,165 1,656 100,206 1,046,620 Services and Supplies 577,319 552,153 399,680 233,287 1,040,506 Utilities and Communications 78,288 73,636 -. -. -. Scholarships, Fellowships, and Waivers, Net 163,122 144,627 -. -. -. Depreciation 143,106 138,306 11,483 9,350 118,406 Self-Insured Claims and Expenses -. -. -. -. 6,955

Total Operating Expenses (Note 19) 3,233,454 3,058,887 412,819 342,843 2,212,487

Operating Income (Loss) (1,223,654) (1,119,560) (19,967) 685,744 152,753

NONOPERATING REVENUES (EXPENSES) State Noncapital Appropriations 790,425 766,103 4,000 -. 7,050 Federal and State Student Financial Aid 231,233 208,173 -. -. -. Noncapital Grants, Contracts, and Gifts 184,502 126,365 -. -. -. Investment Income 52,773 59,848 126,719 3,144 59,359

Net Increase (Decrease) in the Fair Value of Investments 32,626 927 1,113 (3,432) 6,288

Investment Expenses (3,096) (4,624) (271) (1,888) -.

Other Nonoperating Revenues 3,419 2,653 8,706 -. 4,337

Gain (Loss) on Disposal of Capital Assets (179) (1,182) (4,444) (85) 6,771

Interest on Capital Asset-Related Debt (6,124) (6,771) (3,696) -. (30,731)

Other Nonoperating Expenses (2,972) (3,766) (41,389) (685,758) (112,172)

Net Nonoperating Revenues (Expenses) 1,282,607 1,147,726 90,738 (688,019) (59,098)

Income (Loss) Before Other Revenues 58,953 28,166 70,771 (2,275) 93,655

State Capital Appropriations 73,379 57,819 -. -. -. Capital Grants, Contracts, and Donations 25,449 71,627 -. -. -. Additions to Permanent Endowments -. -. 53,828 -. -.

Total Other Revenues 98,828 129,446 53,828 -. -.

Increase (Decrease) in Net Position 157,781 157,612 124,599 (2,275) 93,655

Net Position, Beginning of Year 1,755,958 2,438,619 2,251,156 255,294 1,473,150

Adjustment to Beginning Net Position (Note 3) -. (840,273) (82,776) -. -.

Adjusted Net Position, Beginning of Year, as Restated 1,755,958 1,598,346 2,168,380 255,294 1,473,150

Net Position, End of Year $ 1,913,739 $ 1,755,958 $ 2,292,979 $ 253,019 $ 1,566,805


Statement of Revenues, Expenses, and Changes In Net Positionfor the Fiscal Year Ended June 30, 2019 (amounts expressed in thousands)

BASIC FINANCIAL STATEMENTS


University of Florida

2018-2019 2017-2018

CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees, Net $ 375,407 $ 389,360 Grants and Contracts 1,385,052 1,350,247 Sales and Services of Auxiliary Enterprises 131,179 128,147 Sales and Services of Educational Departments 56,760 58,240 Repayment of Loans and Notes Receivable from Students 12,210 11,679 Interest on Loans Receivable 1,132 1,213 Other Operating Receipts 3,071 2,826 Payments to Employees (2,185,518) (2,044,822) Payments to Suppliers for Goods and Services (660,434) (619,443) Payments to Students for Scholarships and Fellowships (163,122) (144,627) Loans Issued to Students (6,525) (7,139)

Net Cash Used by Operating Activities (1,050,788) (874,319)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Noncapital Appropriations 790,425 766,103 Federal and State Financial Aid 231,233 208,173 Noncapital Grants, Contracts, and Gifts 184,502 126,365 Direct Loan Program Receipts 233,050 240,268 Direct Loan Program Disbursements (233,119) (240,213) Net Change in Funds Held for Others 47,343 (4,794) Other Nonoperating Receipts 1,617 2,622 Other Nonoperating Disbursements (3,459) (7,056)

Net Cash Provided by Noncapital Financing Activities 1,251,592 1,091,468

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from Capital Debt 31,045 -. State Capital Appropriations 61,449 45,564 Capital Grants, Contracts, and Donations 16,413 71,327 Proceeds from Sales of Capital Assets 1,834 803 Other Receipts for Capital Projects 1,811 31 Purchase or Construction of Capital Assets (203,123) (200,238) Principal Paid on Capital Debt and Leases (10,961) (15,579) Interest Paid on Capital Debt and Leases (6,203) (6,771)

Net Cash Used by Capital and Related Financing Activities (107,735) (104,863)

CASH FLOWS FROM INVESTING ACTIVITIES Sale of Investments 2,215,136 1,835,693 Purchase of Investments (2,353,683) (2,004,388) Investment Income 52,183 55,900

Net Cash Used by Investing Activities (86,364) (112,795)

Net Increase (Decrease) in Cash and Cash Equivalents 6,705 (509)

Cash and Cash Equivalents, Beginning of Year 6,316 6,825

Cash and Cash Equivalents, End of Year $ 13,021 $ 6,316

RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES Operating Loss $ (1,223,654) $ (1,119,560) Adjustments to Reconcile Operating Loss to Net Cash Used by Operating Activities: Depreciation and Amortization Expense 143,403 138,306 Change in Assets, Liabilities, Deferred Outflows of Resources, and Deferred Inflows of Resources: Receivables, Net (2,245) (2,516) Due From Component Units (43,791) (2,126) Inventories (544) 311 Other Assets (1,029) (118) Accounts Payable (3,550) 6,152 Salaries and Wages Payable 2,637 4,276 Unearned Revenue (5,647) 32 Deposits Held in Custody 169 (142) Other Postemployment Benefits Payable (25,556) (102,388) Compensated Absences Payable (393) 6,563 Net Pension Liability 32,947 46,126 Deferred Outflows – Pension and OPEB (11,207) (31,424) Deferred Inflows – Pension and OPEB 87,672 182,189

NET CASH USED BY OPERATING ACTIVITIES $ (1,050,788) $ (874,319)

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND CAPITAL AND RELATED FINANCING ACTIVITIES

The following items are recognized on the Statement of Net Position or the Statement of Revenues, Expenses, and Changes in Net Position, but are not cash transactions for the Statement of Cash Flows: Unrealized gain on investments $ 32,626 Loss on refunded 2007A Parking Bonds will be amortized over the life of the 2018A refunding Parking Bonds $ (209) Loss on disposal of capital assets $ (179)


Statement of Cash Flowsfor the Fiscal Year Ended June 30, 2019 (amounts expressed in thousands)



FOR THE FISCAL YEAR ENDED JUNE 30, 2019

NOTES TO THEFINANCIAL STATEMENTS


24 Summary of Significant Accounting Policies28 Reporting Changes28 Adjustments to Beginning Net Position 29 Deficit Net Position in Individual Funds29 Investments32 Receivables 33 Due From State33 Due From and To Component Units/University33 Capital Assets34 Museum and Art Collections 34 Deferred Outflows/Inflows Of Resources34 Unearned Revenue34 Long-Term Liabilities40 Retirement Plans46 Construction Commitments46 State Self-Insurance Programs46 University Self-Insurance Programs47 Litigation and Contingencies47 Functional Distribution of Operating Expenses47 Component Units47 Segment Information

NOTES TO THEFINANCIAL STATEMENTS


1. Summary of Significant Accounting Policies

The significant accounting policies followed by the University of Florida are described below to enhance the usefulness of the financial statements.

A. REPORTING ENTITY

The University of Florida is a separate public instrumentality that is part of the State university system of public universities, which is under the general direction and control of the Florida Board of Governors. The University is directly governed by a Board of Trustees (Trustees) consisting of thirteen members. The Governor appoints six citizen members and the Board of Governors appoints five citizen members. These members are confirmed by the Florida Senate and serve staggered terms of five years. The chair of the faculty senate and the president of the student body of the University are also members. The Board of Governors establishes the powers and duties of the Trustees.

The Trustees are responsible for setting policies for the University, which provide governance in accordance with State law and Florida Board of Governors’ Regulations. The Trustees select the University President. The University President serves as the executive officer and the corporate secretary of the Trustees, and is responsible for administering the policies prescribed by the Trustees.

Criteria for defining the reporting entity are identified and described in the Governmental Accounting Standards Board’s (GASB) Codification of Governmental Accounting and Financial Reporting Standards, Sections 2100 and 2600. These criteria were used to evaluate potential component units for which the primary government is financially accountable and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the primary government’s financial statements to be misleading or incomplete. Based on the application of these criteria, the University of Florida is a component unit of the state of Florida, and its financial balances and activities are discretely presented in the State’s Comprehensive Annual Financial Report.

B. DISCRETELY PRESENTED COMPONENT UNITS

Based on the application of the criteria for determining component units, certain affiliated organizations are required to be included within the University reporting entity as discretely presented component units because of the significance of their relationship with the University. These organizations are legally separate from the University and are governed by separate boards. The University

further categorizes its component units as Direct-Support Organizations, Health Science Center Affiliates, and Shands Hospital and Others. An annual audit of each organization’s financial statements is conducted by independent certified public accountants. The annual reports are submitted to the Auditor General and the University Board of Trustees. Additional information is presented in Note 20.

However, financial activities of certain component units are not included in the University’s financial statements and are denoted below with an asterisk (*). The total assets and operating revenues related to these component units are $25 million and $18 million, respectively. These amounts represent less than one percent of the total aggregate component units’ assets and operating revenues.

C. DIRECT-SUPPORT ORGANIZATIONS

The University’s direct-support organizations, as provided for in Section 1004.28, Florida Statutes, and Board of Governors Regulation 9.011, are considered component units of the University of Florida and therefore, the latest audited financial statements of these organizations are discretely presented in the financial statements of the University. These legally separate, not-for-profit corporations are organized and operated exclusively to assist the University in achieving excellence by providing supplemental resources from private gifts and bequests and valuable education support services. Florida Statutes authorize these organizations to receive, hold, invest, and administer property and to make expenditures to or for the benefit of the University. These organizations and their purposes are explained as follows:

n University of Florida Foundation, Inc., solicits, collects, manages, and directs contributions to the various academic departments and programs of the University and assists the University in fund raising, public relations, and maintenance of alumni records. Their financial statements include the activities of the University of Florida Alumni Association, Inc.

n The University Athletic Association, Inc., conducts various inter-collegiate athletic programs for and on behalf of the University.

n University of Florida Research Foundation, Inc., promotes, encourages, and assists research activities of the University through income derived from or related to the development and commercialization of intellectual properties, which include inventions, discoveries, processes, and work products.

n GatorCare Health Management Corporation coordinates and facilitates the management of the self-insured health insurance plan of the University and its participating affiliated employers, collecting and paying employer and employee premiums.

NOTES TO THE FINANCIAL STATEMENTS


n Florida Foundation Seed Producers, Inc., supplies Florida farmers and producers with crop seed and nursery stock. This organization stocks foundation seed of the best-known varieties acceptable to Florida climate and soils in adequate quantities and at reasonable prices.

n University of Florida Development Corporation develops and maintains Innovation Square where the University-owned Florida Innovation Hub is located.

n Gator Boosters, Inc., solicits funds for the benefit of the University athletic programs.

n Citrus Research and Development Foundation, Inc., advances disease and production research and product development activities to ensure the survival and competitiveness of Florida’s citrus growers through innovation.

n University of Florida Alumni Association, Inc., supports activities of the alumni of the University of Florida. Its financial transactions are reflected in the financial statements of the University of Florida Foundation, Inc.

n Florida 4-H Club Foundation, Inc.,* promotes the educational objectives of the 4-H Youth Development Program, an official part of the Florida Cooperative Extension Service.

n University of Florida Leadership and Education Foundation, Inc.,* furthers agriculture and natural resource education and related activities, promotes agriculture and natural resources leadership, and makes contributions to and confer benefits upon the University.

n University of Florida Investment Corporation* promotes the educational purposes of the University of Florida by providing investment research, advice, counsel, and management to and for the University Board of Trustees and affiliated organizations of the University.

n UF Historic St. Augustine, Inc.,* ensures the long-term preservation and interpretation of State-owned historic properties in St. Augustine.

n Southwest Florida Research and Education Foundation, Inc.,* provides research and educational support to the University of Florida Southwest Florida Research and Education Center.

n Cattle Enhancement Board, Inc.,* promotes research, education and extension at, or for the benefit of, the Institute of Food and Agricultural Sciences at the University of Florida on issues related to the Florida cattle industry, including, but not limited to production, disease prevention, forage development, and genetic research and technology.

In June 2019, the Trustees decertified the following direct-support organizations: The University of Florida Law Center Association, Inc., Citrus Research and Education Foundation, Inc., and Treasure Coast Agricultural Research Foundation, Inc.

D. HEALTH SCIENCE CENTER AFFILIATES

The corporations listed below, except Faculty Clinic, Inc., are Faculty Practice Plans, as provided for in Board of Governors Regulation 9.017. The Faculty Practice Plans provide educationally-oriented clinical practice settings and opportunities through which faculty members provide health, medical, veterinary, and dental care to patients as an integral part of their academic activities and their employment as faculty. Because these faculty practice activities generate income, the colleges are authorized to regulate fees generated from faculty practice and maintain Faculty Practice Plans for the orderly collection and distribution of fees. These organizations provide significant support for the clinical instruction function of the University of Florida J. Hillis Miller Health Science Center (JHMHC) and are component units of the University of Florida.

n Florida Clinical Practice Association, Inc., bills and collects clinical professional fees to support the educational, research, and service programs of the University of Florida College of Medicine.

n University of Florida Jacksonville Physicians, Inc., bills and collects professional fees from the clinical practice of the University of Florida physicians in order to fund and promote the educational, clinical and research missions, and support the clinical activities, of the Jacksonville campus of the College of Medicine.

n Faculty Associates, Inc., bills and collects clinical professional fees to support the educational, research, and service programs of the University of Florida College of Dentistry.

n Florida Veterinary Medicine Faculty Association, Inc., bills and collects clinical professional fees to support the educational, research, and service programs of the University of Florida College of Veterinary Medicine.

n University of Florida College of Pharmacy Faculty Practice Association, Inc., performs billing and collection of fees to support the educational, research, and service programs of the University of Florida College of Pharmacy.

n Faculty Clinic, Inc.,* operates primarily as a facility management company that leases space to Shands Jacksonville and University of Florida Jacksonville Physicians, Inc.

n University of Florida College of Nursing Faculty Practice Association, Inc.,* performs billing and collection of professional fees to support the educational, research, and service programs of the University of Florida College of Nursing.



n Florida Health Professions Association, Inc.,* performs billing and collection of clinical professional fees to support the educational, research, and service programs of the University of Florida College of Public Health and Health Professions.

E. SHANDS HOSPITAL AND OTHERS

n Shands Teaching Hospital and Clinics, Inc., (Shands) was incorporated October 15, 1979, as a not-for-profit corporation. Shands, a major tertiary care teaching institution, is a leading referral center in the state of Florida and the southeast United States and facilitates medical education programs at the University.

Shands entered into a contractual agreement with the State Board of Education as of July 1, 1980, as subsequently restated and amended, to provide for the use of hospital facilities at the JHMHC through December 31, 2057, with renewal provisions. The contractual agreement also provides for the transfer to Shands of all other assets and liabilities arising from the operation of the hospital facilities prior to July 1, 1980. At termination of the contractual agreement, the net position of Shands reverts to the State Board of Education. Legal title to all buildings and improvements transferred to Shands remains with the state of Florida during the term of the contractual agreement. The contractual agreement provides for a 12-month grace period for any event of default, other than the bankruptcy of Shands. In addition, the contractual agreement limits the right of the State Board of Education to terminate the contractual agreement solely to the circumstance in which Shands declares bankruptcy and, in such event, requires net revenues derived from the operation of the hospital facilities to continue to be applied to the payment of Shands’ debts.

Under the terms of the contractual agreement, Shands is obligated to manage, operate, maintain, and insure the hospital facilities in support of the programs of the JHMHC and further agrees to contract with the State Board of Education for the provision of these programs. By operation of law, the University of Florida Board of Trustees has become the successor-in-interest to the State Board of Education.

n Shands Jacksonville HealthCare, Inc., (Shands Jacksonville) is a Florida not-for-profit corporation. Shands Jacksonville was organized primarily to provide healthcare and related services to the community, including the City of Jacksonville and surrounding counties, and to support the teaching and research missions of the University.

n University of Florida Self-Insurance Program (the Program) was created by the Florida Board of Regents, succeeded by the Florida Board of Governors, pursuant to Section 1004.24, Florida Statutes. The Program provides comprehensive general liability and professional liability (malpractice) coverage for the University of Florida and affiliated teaching hospitals that are providing education in healthcare or veterinary services.

n University of Florida Healthcare Education Insurance Company (HEIC) was created on September 1, 1994, as a self-insurance mechanism created pursuant to Section 1004.24, Florida Statutes. HEIC writes coverage for the participants in the Self-Insurance Program (the Program) for loss exposure above the Program’s retention. HEIC obtains excess loss reinsurance coverage from commercial insurance carriers for certain layers of exposure.

F. BASIS OF PRESENTATION

The University’s accounting policies conform with accounting principles generally accepted in the United States of America applicable to public colleges and universities as prescribed by GASB. The National Association of College and University Business Officers (NACUBO) also provides the University with recommendations prescribed in accordance with generally accepted accounting principles promulgated by GASB and the Financial Accounting Standards Board (FASB). GASB allows public universities various reporting options. The University of Florida has elected to report as an entity engaged in only business-type activities. This election requires the adoption of the accrual basis of accounting and entity-wide reporting including the following components:

• Management’s Discussion and Analysis• Basic Financial Statements: 1. Statement of Net Position 2. Statement of Revenues, Expenses, and

Changes in Net Position 3. Statement of Cash Flows 4. Notes to the Financial Statements• Other Required Supplementary Information



G. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING

Basis of accounting refers to when revenues, expenses, assets, deferred outflows of resources, liabilities, and deferred inflows of resources are recognized in the accounts and reported in the financial statements. Specifically, it relates to the timing of the measurements made, regardless of the measurement focus applied. The University and its component unit’s financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities, and deferred inflows of resources resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities, and deferred inflows of resources resulting from non-exchange activities are generally recognized when all applicable eligibility requirements, including time requirements, are met. The University and its component units, including those which previously followed FASB as discussed in Note 2, follow GASB standards of accounting and financial reporting.

Significant interdepartmental sales between auxiliary service departments and other institutional departments have been eliminated from revenues and expenses for reporting purposes.

The University’s principal operating activities consist of instruction, research, and public service. Operating revenues and expenses generally include all fiscal transactions directly related to these activities as well as administration, operation, and maintenance of capital assets and depreciation on capital assets. Nonoperating revenues include state noncapital appropriations, federal and state student financial aid, and investment income. Interest on capital asset-related debt is a nonoperating expense. Other revenues generally include revenues for capital construction projects.

The Statement of Net Position is presented in a classified format to distinguish between current and noncurrent assets and liabilities. When both restricted and unrestricted resources are available to fund certain programs, it is the University’s policy to first apply the restricted resources to such programs, followed by the use of the unrestricted resources.

The Statement of Revenues, Expenses, and Changes in Net Position is presented by major sources and is reported net of tuition scholarships, discounts, and allowances. Tuition scholarships, discounts, and allowances are the differences between the stated charge for goods and services provided by the University and the amount that is actually paid by a student or a third-party making payments on behalf of the student. The University applied the “Alternate Method” as prescribed in NACUBO Advisory Report 2000-05 to determine the reported net tuition scholarships, discounts, and allowances. Under this method, the University computes these amounts by

allocating the cash payments to students, excluding payments for services, using a ratio of total aid to aid not considered to be third-party aid.

The Statement of Cash Flows is presented using the direct method in compliance with GASB Statement No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting.

H. CASH AND CASH EQUIVALENTS

The amount reported by the University as cash and cash equivalents consists of cash on hand and cash in demand accounts. University cash deposits are held in banks qualified as public depositories under Florida law. All such deposits are insured by Federal depository insurance, up to specified limits, or collateralized with securities held in Florida’s multiple financial institution collateral pool required by Chapter 280, Florida Statutes. Cash and cash equivalents that are externally restricted to make debt service payments, maintain sinking or reserve funds, or to purchase or construct capital assets or other restricted assets, are classified as restricted.

I. INVESTMENTS AND FAIR VALUE MEASUREMENT

The University categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets. Level 2 inputs are significant other observable inputs. Level 3 inputs are significant unobservable inputs. The University reports certain investments at net asset value as allowed per GASB Statement No. 72, Fair Value Measurement and Application.

J. CAPITAL ASSETS

University capital assets consist of land, construction in progress, intangibles work in progress, works of art and historical treasures, buildings, infrastructure and other improvements, furniture and equipment, library resources, property under capital lease and leasehold improvements, computer software, and other capital assets. These assets are capitalized and recorded at cost at the date of acquisition or at estimated fair value on the date received in the case of gifts and purchases of State surplus property. Additions, improvements, and other outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. The University has a capitalization threshold of $4 million for intangible assets, which includes computer software, $5,000 for tangible personal property, and $250 for library resources. The costs of all new buildings and projects adding new square footage are capitalized. Infrastructure and leasehold improvements have a $250,000 capitalization threshold. For building renovations, the threshold is $250,000, or the entire



amount if the costs are at least 25% of the cost basis of the building. Depreciation is computed on the straight-line basis over the following estimated useful lives:

• Buildings – 5 to 50 years, depending on construction• Infrastructure and Other Improvements – 10 to 50 years• Furniture and Equipment – 3 to 20 years• Library Resources – 10 years• Property Under Capital Lease and Leasehold

Improvements – up to 50 years• Computer Software – 5 years

K. NONCURRENT LIABILITIES

Noncurrent liabilities include principal amounts of capital improvement debt payable, loans and notes payable, installment purchase agreements payable, capital leases payable, compensated absences payable, other postemployment benefits payable, net pension liabilities, and other noncurrent liabilities that are not scheduled to be paid within the next fiscal year. Capital improvement debt payable is reported net of unamortized premiums or discounts and losses on refunding. The University amortizes debt premiums and discounts over the life of the debt using the straight-line method. Losses on refunding are amortized over the life of the old debt or new debt (whichever is shorter) using the straight-line method.

L. PENSIONS

For purposes of measuring the net pension liabilities, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net positions of the Florida Retirement System (FRS) defined benefit plan and the Health Insurance Subsidy (HIS) defined benefit plan and additions to/deductions from the FRS and HIS fiduciary net positions have been determined on the same basis as they are reported by the FRS and the HIS plans. Benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with benefit terms. Investments are reported at fair value.

2. Reporting Changes

The University implemented GASB Statement No. 83, Certain Asset Retirement Obligations. This statement addresses accounting and financial reporting for asset retirement obligations (AROs) of governments that have legal obligations to perform future asset retirement activities related to its tangible capital assets. This Statement establishes criteria for determining the timing and pattern of recognition of a liability and a corresponding deferred outflow of resources for AROs, and requires additional note disclosures about a government’s AROs.

The University also implemented GASB Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings

and Direct Placements, which amends GASB Statement No. 34, Basic Financial Statements - and Management’s Discussion and Analysis - for State and Local Governments, paragraph 119; and GASB Statement No. 38, Certain Financial Statement Note Disclosures, paragraphs 10 and 12. This statement improves the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements, and clarifies which liabilities governments should include when disclosing information related to debt. This Statement also requires that additional essential information related to debt be disclosed in notes to financial statements.

The Florida Legislature passed, and the Governor signed into law Chapter 2018-004, Laws of Florida, a provision that changed Section 1004.28, Florida Statutes, which addresses University’s direct-support organizations (DSO). With this change, the University Board of Trustees is required to approve all DSO’s board members. Under current accounting guidance, a key factor in determining whether a DSO should report under the FASB versus the GASB is board control. With the change in Florida Statutes, the University has control of the boards of the DSOs and the FASB reported model is no longer appropriate. Three discretely presented component units reported under FASB prior to the legislative change and converted from FASB to GASB reporting model for the 2018-19 fiscal year.

3. Adjustments to Beginning Net Position

The beginning net position of the University of Florida Foundation, Inc. (Foundation) was decreased by $82,776,224 as a result of the change in the financial accounting framework as discussed in Note 2. The adjustment in net position was due to the elimination of $78,818,622 of endowment pledges receivable, a decrease of $14,927,864 due to the restatement of split-interest agreements and external trusts to deferred inflows of resources under GASB Statement No. 81, Irrevocable Split-Interest Agreements, and an increase of $10,970,262 due to the restatement of the FASB pension liability to a pension asset under GASB Statement No. 68, Accounting and Financial Reporting for Pensions.

Table 1 summarizes adjustment to the beginning net position of the Foundation reported in the component units’ Statement of Revenues, Expenses, and Changes in Net Position:

Table 1. Adjustments to Beginning Net Position - Component Units

DescriptionDirect-Support

Organizations

University of Florida Foundation, Inc. $ (82,776,224)

Total Adjustments to Beginning Net Position $ (82,776,224)



4. Deficit Net Position in Individual Funds

The University reported a net position which included a deficit in unrestricted funds as shown in Table 2. This deficit can be attributed to the full recognition of long-term liabilities (i.e. net pension liabilities – GASB Statement No. 68 – and OPEB payable – GASB Statement No. 75) in these funds.

Table 2. Deficit Net Position in Individual Funds

Description Net Position

Unrestricted $ (253,546,410)

Total $ (253,546,410)

5. Investments

Section 1011.42(5), Florida Statutes, authorizes universities to invest funds with the State Treasury and State Board of Administration (SBA), and requires that universities comply with the statutory requirements

governing investment of public funds by local governments. Accordingly, universities are subject to the requirements of Chapter 218, Part IV, Florida Statutes. The University’s Board of Trustees has adopted a written investment policy providing that surplus funds of the University shall be invested in those institutions and instruments permitted under the provisions of Florida Statutes. Pursuant to Section 218.415(16), Florida Statutes, the University is authorized to invest in the Florida PRIME investment pool administered by the SBA; interest-bearing time deposits and savings accounts in qualified public depositories, as defined in Section 280.02, Florida Statutes; direct obligations of the United States Treasury; obligations of Federal agencies and instrumentalities; securities of, or interests in, certain open-end or closed-end management type investment companies; Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency; and other investments approved by the University’s Board of Trustees, as authorized by law. Investments set aside to make debt service payments, maintain sinking or reserve funds, or to purchase or construct capital assets are classified as restricted. Investments of the University and its component units at June 30, 2019, are reported at fair value and shown in Tables 3 through 6.

Table 3. University Investments

Fair Value Measurements Using

Investments by Fair Value Level

Total

Quoted Prices in Active Markets for

Identical Assets (Level 1)

Significant Other Observable

Inputs (Level 2)

Significant Unobservable

Inputs (Level 3)

External Investment Pool: State Treasury Special Purpose Investment Account $ 1,016,288,135 $ - $ -. $ 1,016,288,135

State Board of Administration Debt Service Accounts 34,965 34,965 -. -

Total Investments by Fair Value Level 1,016,323,100 $ 34,965 $ -. $ 1,016,288,135

Investments Measured at the Net Asset Value (NAV)

Private Equity Funds 938,480,480

Total University Investments $ 1,954,803,580

Table 4. University Investments Measured at the NAV

Investments Measured at the NAV Fair ValueUnfunded

CommitmentsRedemption Frequency

(if Currently Eligible)Redemption

Notice Period

Private Equity Funds $ 938,480,480 $ - N/A N/A

University investments measured at net asset value are comprised of the following category:

n Private Equity Funds - This category includes investments in several limited partnership funds that invest in equity securities and debt of private companies.



Component unit investments measured at net asset value are comprised of the following categories:

n International Equity – This category includes an investment in a foreign-based publicly-traded company focused on providing law enforcement with new tools and technology.

n Real Estate Investments – This category includes an in investment in the form of real estate with donor restrictions. The real estate is held at fair value less estimated costs to sell.

n Hedge Funds – This category includes an investment in a hedge fund in which the fund manager is authorized to invest in a broad spectrum of securities that include, but are not limited to, the following: equity and debt securities, currency, commodities, foreign debt, options, futures, and swaps.

n Private Equity Funds – This category includes investments in several limited partnership funds that invest in equity securities and debt of private companies.

Table 5. Component Unit Investments

Fair Value Measurements Using

Investments by Fair Value Level

Total

Quoted Prices in Active Markets for

Identical Assets (Level 1)

Significant Other Observable

Inputs (Level 2)

Significant Unobservable

Inputs (Level 3)

External Investment Pool: State Treasury Special Purpose Investment Account $ 118,026,429 $ - $ - $ 118,026,429

Commercial Paper 10,575,550 10,575,550 - -

US Guaranteed Obligations 14,887,200 13,315,397 1,571,803 -

Federal Agency Obligations 1,890,465 - 1,890,465 -

Domestic Bonds and Notes 38,396,709 13,754,000 24,642,709 -

International Bonds and Notes 745,174 - 745,174 -

Domestic Stock 606,950 586,879 20,071 -

Bond Mutual Funds 178,882,561 131,219,343 47,663,218 -

Equity Mutual Funds 151,018,354 98,655,668 52,362,686 -

Other Investments 32,684,722 18,887,527 13,797,195 -

Private Equity Funds 2,292,015 - - 2,292,015

Total Investments by Fair Value Level 550,006,129 $ 286,994,364 $ 142,693,321 $ 120,318,444

Investments Measured at the Net Asset Value (NAV)International Equity 85,128

Real Estate Investments (Directly Owned) 8,423,607

Hedge Funds 5,660,728

Private Equity Funds 2,408,624,662

Total Investments Measured at the NAV 2,422,794,125

Total Investments Measured at Fair Value 2,972,800,254

Other

Commercial Paper 6,545,000

Money Market Funds 5,213,649

Cash Surrender Value of Life Insurance Policy 491,913

Cash Collateral on Deposit with Swap Counterparty 26,410,000

Other Investments 9,795,585

Total Other Investments 48,456,147

Total Component Unit Investments $ 3,021,256,401

Table 6. Component Unit Investments Measured at the NAV

Investments Measured at the NAV

Fair Value

Unfunded

Commitments

Redemption Frequency (if

Currently Eligible)

Redemption Notice Period

International Equity $ 85,128 $ - Illiquid N/A

Real Estate Investments 8,423,607 - Illiquid N/A

Hedge Funds 5,660,728 - Quarterly 45 Days

Private Equity Funds 2,408,624,662 271,893,616 Monthly 30 Days

Total Component Unit Investments $ 2,422,794,125 $ 271,893,616



A. EXTERNAL INVESTMENT POOLS

The University and its discretely presented component units (see Note 1) reported investments at fair value totaling $1,016,288,135 and $118,026,429, respectively, at June 30, 2019, in the State Treasury Special Purpose Investment Account (SPIA) investment pool, representing ownership of a share of the pool, not the underlying securities. Pooled investments with the State Treasury are not registered with the Securities and Exchange Commission. Oversight of the pooled investments with the State Treasury is provided by the Treasury Investment Committee per Section 17.575, Florida Statutes. The authorized investment types are set forth in Section 17.57, Florida Statutes. The SPIA investment pool carried a credit rating of AA-f by Standard & Poor’s and had an effective duration of 2.71 years and fair value factor of 1.0103 at June 30, 2019. Participants contribute to the SPIA investment pool on a dollar basis. These funds are commingled and a fair value of the pool is determined from the individual values of the securities. The fair value of the securities is summed and a total pool fair value is determined. A fair value factor is calculated by dividing the pool’s total fair value by the pool participant’s total cash balances. The fair value factor is the ratio used to determine the fair value of an individual participant’s pool balance. The University relies on policies developed by the State Treasury for managing interest rate risk or credit risk for this investment pool. Disclosures for the State Treasury investment pool are included in the notes to the financial statements of the State’s Comprehensive Annual Financial Report.

B. STATE BOARD OF ADMINISTRATION DEBT SERVICE ACCOUNTS

The University reported investments at fair value totaling $34,965 at June 30, 2019, in the State Board of Administration (SBA) Debt Service Accounts. These investments are used to make debt service payments on bonds issued by the State Board of Education for the benefit of the University. The University’s investments consist of United States Treasury securities, with maturity dates of six months or less and are reported at fair value. The University relies on policies developed by the SBA for managing interest rate risk and credit risk for these accounts. Disclosures for the Debt Service Accounts are included in the notes to the financial statements of the State’s Comprehensive Annual Financial Report.

C. OTHER INVESTMENTS

In addition to external investment pools, the University and its discretely presented component units invested in various debt and equity securities, money market funds, and mutual funds. For the University, the majority of the other investments are private equity funds managed by the University of Florida Investment Corporation (UFICO). For the University’s discretely presented component units, other investments are those reported primarily by the University of Florida Foundation, Inc., The University Athletic Association, Inc., Florida Clinical Practice Association, Inc., Shands Teaching Hospital and Clinics, Inc., Shands Jacksonville HealthCare, Inc., and the University of Florida Self-Insurance Program. The following risks apply to the University’s and its discretely presented component units’ investments other than external investment pools:



n Interest Rate Risk – Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Pursuant to Section 218.415(16), Florida Statutes, the University’s investments in securities must provide sufficient liquidity to pay obligations as they come due. Investments of the University’s component units in debt securities, bonds and notes, and bond mutual funds, and their future maturities at June 30, 2019, are shown in Table 7.

n Credit Risk – Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Obligations of the United States Government or obligations explicitly guaranteed by the United States Government are not considered to have credit risk and do not require disclosure of credit quality. The private equity funds are unrated. At June 30, 2019, the University’s component units had bonds and notes and bond mutual funds, with quality ratings by nationally recognized rating agencies (e.g., Moody’s Investors Service), as shown in Table 8.

n Custodial Credit Risk – Custodial credit risk is the risk that, in the event of the failure of the counterparty to a transaction, the University will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. Exposure to custodial credit risk relates to investment securities that are held by someone other than the University and are not registered in the University’s name. The University has no formal policy on custodial credit risk. The component units manage their custodial credit risk based on various investment policies, which may be obtained separately from the component units.

n Concentration of Credit Risk – Concentration of credit risk is the risk of loss attributed to the magnitude of the University’s

investments in a single issuer. The University has no formal policy on concentration of credit risk. The component units manage their concentration of credit risk based on various investment policies, which may be obtained separately from the component units.

6. Receivables

A. ACCOUNTS RECEIVABLE

Accounts receivable represent amounts for grant and contract reimbursements due from third parties, student tuition and fees, various sales and services provided to students and third parties, and interest accrued on investments and loans receivable. Accounts receivable, net of an allowance for uncollectible accounts, reported as of June 30, 2019, are summarized in Table 9.

Table 9. Accounts Receivable

Description

Grants and Contracts $ 75,065,207

Student Tuition and Fees 15,209,117

Sales and Services of Auxiliary Enterprises 4,972,629

Interest 3,060,610

Sales and Services of Educational Departments 1,165,289

Total Accounts Receivable, Net $ 99,472,852

B. LOANS AND NOTES RECEIVABLE

Loans and notes receivable represent all amounts owed on promissory notes from debtors, including student loans made under the Federal Perkins Loan Program and other loan programs.

Table 7. Component Units Debt Investment Maturities

Investment Maturities (in years)

Types of Investments Fair Value Less than 1 1-5 6-10 More than 10

United States Government and Federally-Guaranteed Obligations $ 14,887,200 $ 13,315,397 $ 79,894 $ 348,556 $ 1,143,353

Federal Agency Obligations 1,890,465 1,890,465 - - -

Bonds and Notes 39,141,883 22,666,291 2,344,905 14,130,687 -

Bond Mutual Funds 178,882,561 3,978,522 157,610,003 17,294,036 -

Total $ 234,802,109 $ 41,850,675 $ 160,034,802 $ 31,773,279 $ 1,143,353

Table 8. Component Units Debt Investments Quality Ratings

Types of Investments

Fair Value

AAA/Aaa

AA/Aa

A/BaLess than A/Ba

or Not Rated

Federal Agency Obligations $ 1,890,465 $ 1,111,432 $ 779,033 $ - $ -

Bonds and Notes 39,141,883 9,509,053 2,944,860 7,853,163 18,834,807

Money Market Funds 5,213,649 5,141,450 - - 72,199

Bond Mutual Funds 178,882,561 63,213,470 60,966,588 31,024,636 23,677,867

Total $ 225,128,558 $ 78,975,405 $ 64,690,481 $ 38,877,799 $ 42,584,873



C. ALLOWANCES FOR UNCOLLECTIBLE RECEIVABLES

Allowances for uncollectible accounts and loans and notes receivable are reported based upon management’s best estimate as of fiscal year-end, considering type, age, collection history, and other factors considered appropriate. Accounts receivable for student tuition and fees, various sales and services provided to students and third parties, and interest are reported net of an allowance of $11,431,550, which is 31.9% of total related accounts receivable. Loans and notes receivable are reported net of an allowance of $4,683,265, which is 13.4% of total related loans and notes receivable. No allowance has been accrued for grants and contracts receivable. University management considers these to be fully collectible.

7. Due From State

This amount consists of $100,286,587 of Public Education Capital Outlay, Capital Improvement Fee Trust Fund, and general revenue allocations due from the State to the University for construction of University facilities.

8. Due From and To Component Units/University

Component units’ due from and due to amounts include receivables and payables between the various component unit columns. Some component units are not presented (see Note 1). Accordingly, amounts reported by the University as due from and to component units on the Statement of Net Position may not agree with amounts reported by the component units as due from and to the University.

9. Capital Assets

Capital assets activity for the fiscal year ended June 30, 2019, is presented in Table 10. The Buildings and Buildings Accumulated Depreciation balances were adjusted by $81,076,066 and $71,349,030, respectively, for a net increase of $9,727,036 related to assets leased to Shands Teaching Hospital and Clinics, Inc. and that were determined to belong to the University.

Table 10. Capital Assets

Description Beginning Balance Adjustments Additions Reductions Ending Balance

Nondepreciable Capital Assets:

Land $ 12,467,035 $ - $ - $ - $ 12,467,035

Construction in Progress 57,113,722 - 145,344,594 81,598,064 120,860,252

Intangibles Work in Progress 31,239,675 - 7,114,177 38,353,852 -

Works of Art and Historical Treasures 4,509,913 - 103,836 31,327 4,582,422

Total Nondepreciable Capital Assets 105,330,345 - 152,562,607 119,983,243 137,909,709

Depreciable Capital Assets:

Buildings 2,850,423,924 81,076,066 81,072,985 489,635 3,012,083,340

Infrastructure and Other Improvements 133,978,878 - 582,219 - 134,561,097

Furniture and Equipment 641,500,542 - 55,191,920 36,851,434 659,841,028

Library Resources 351,964,571 - 9,329,927 1,230,001 360,064,497

Property Under Capital Lease and Leasehold Improvements 23,113,034 - - - 23,113,034

Computer Software 24,533,000 - 38,353,853 - 62,886,853

Other Capital Assets 927,545 - 6,406 55,749 878,202

Total Depreciable Capital Assets 4,026,441,494 81,076,066 184,537,310 38,626,819 4,253,428,051

Less Accumulated Depreciation:

Buildings 1,328,106,933 71,349,030 87,493,362 298,122 1,486,651,203

Infrastructure and Other Improvements 82,472,037 - 4,135,363 - 86,607,400

Furniture and Equipment 437,121,761 - 38,915,615 26,796,062 449,241,314

Library Resources 302,745,819 - 11,173,807 290,501 313,629,125

Property Under Capital Lease and Leasehold Improvements 8,642,181 - 1,284,621 - 9,926,802

Computer Software 24,533,000 - - - 24,533,000

Other Capital Assets 621,097 - 103,123 19,855 704,365

Total Accumulated Depreciation 2,184,242,828 71,349,030 143,105,891 27,404,540 2,371,293,209

Total Depreciable Capital Assets, Net 1,842,198,666 9,727,036 41,431,419 11,222,279 1,882,134,842

Total Capital Assets, Net $ 1,947,529,011 $ 9,727,036 $ 193,994,026 $ 131,205,522 $ 2,020,044,551



10. Museum and Art Collections

The Florida Museum of Natural History, which is the official state-sponsored and chartered natural history museum and part of the University, maintains a depository of biological, paleontological, archaeological, and ethnographic materials. The Museum’s collections contain over 40 million specimens and objects, more than half of which are catalogued, either individually or in lots. While many of the collections are undoubtedly quite valuable and irreplaceable, the University has not placed a dollar value on these items and, accordingly, the financial statements do not include these assets.

The Samuel P. Harn Museum of Art, which is also part of the University, maintains a collection of over 11,000 works of art. In accordance with professional practice among the nation’s art mu-seums, and in compliance with museum accreditation standards, the University has not placed a dollar value on these items.

11. Deferred Outflows/Inflows of Resources

Certain changes in the University’s proportionate share of the net pension liabilities of the cost-sharing multiple-employer Florida Retirement System and Health Insurance Subsidy defined benefit plans, as well as in the University’s proportionate share of the total other postemployment benefits liability of the Division of State Group Insurance, are reported as deferred outflows and inflows of resources. These include changes in actuarial assumptions, differences between actual and expected experience in the measurement of the liabilities, the net difference between projected and actual earnings on pension plan investments as well as changes in the University’s proportion of the collective liabilities since the prior measurement date, and changes between the University’s contributions and its proportionate share of contributions. In addition, University contributions to the pension and other

postemployment benefit plans subsequent to the measurement date for the collective liabilities are reported as deferred outflows of resources. See Note 13 for a discussion of the University’s other postemployment benefits payable and the related deferred outflows and inflows of resources. See Note 14 for a complete discussion of the University’s defined benefit pension plans and the related deferred outflows and inflows of resources. Other deferred outflows consists of the resources tied to the asset retirement obligation recorded by the University under GASB Statement No. 83. See Note 13 for a complete discussion of the University’s asset retirement obligation and the related deferred outflows.

12. Unearned Revenue

Unearned Revenue includes amounts received prior to the end of the fiscal year but related to subsequent accounting periods. Unearned Revenue as of June 30, 2019, is summarized in Table 11.

Table 11. Unearned Revenue

Description

Grants and Contracts $ 41,454,649

Auxiliary Enterprises 10,611,533

Student Tuition and Fees 6,133,304

Total Unearned Revenue $ 58,199,486

13. Long-Term Liabilities

Long-term liabilities of the University at June 30, 2019, include capital improvement debt payable, loans and notes payable, installment purchase agreements payable, capital leases payable, compensated absences payable, other postemployment benefits payable, net pension liability, and other noncurrent liabilities. Long-term liability activity for the fiscal year ended June 30, 2019, is presented in Table 12.

Table 12. Long-Term Liabilities

DescriptionBeginning

Balance Additions

ReductionsEnding

BalanceCurrent Portion

Capital Asset-Related Debt:

Capital Improvement Debt Payable $ 138,115,340 $ 42,476,508 $ 21,091,433 $ 159,500,415 $ 9,547,000

Loans and Notes Payable 5,145,015 -. 408,233 4,736,782 417,839

Installment Purchase Agreements Payable 1,612,192 -. 1,112,104 500,088 451,788

Capital Leases Payable 2,343,267 -. 176,026 2,167,241 187,380

Total Capital Asset-Related Debt 147,215,814 42,476,508 22,787,796 166,904,526 10,604,007

Other Long-Term Liabilities:

Compensated Absences Payable 125,229,012 10,452,174 10,845,110 124,836,076 11,376,585

Other Postemployment Benefits Payable 1,069,104,000 207,242,000 232,798,000 1,043,548,000 15,774,000

Net Pension Liability 611,171,279 392,171,297 359,224,323 644,118,253 4,197,839

Other Noncurrent Liabilities 13,968,933 9,482,000 164,518 23,286,415 -.

Total Long-Term Liabilities $ 1,966,689,038 $ 661,823,979 $ 625,819,747 $ 2,002,693,270 $ 41,952,431



A. CAPITAL IMPROVEMENT DEBT PAYABLE

Capital improvement debt is issued to construct student housing, parking, and various other University facilities. The outstanding debt for student housing and the parking facilities is secured by a pledged portion of housing rental revenues and parking fees. The outstanding debt for the Clinical Translational Research Building is secured by a pledged portion of indirect cost revenues received by the College of Medicine. The outstanding debt for the renovation and expansion of the student activity center building is secured by a pledged portion of the student and activity fees. Pledged revenues are equal to the remaining debt service requirements to maturity for the capital improvement debt.

On October 25, 2018, the Florida Board of Governors, on behalf of the University, issued $39,070,000 of University of Florida Parking Facility Revenue Bonds, Series 2018A. The bonds are repaid from pledged revenues of transportation and parking fees. $28,790,000 of the proceeds are being used to finance the construction of a parking facility on the main campus of the University of Florida. The remaining $10,280,000 were used to refund all outstanding portions of the University of Florida Parking Facility Revenue Bonds, Series 2007A, maturing in years 2019 through 2027. The new bonds will mature in annual increments starting on August 1, 2019 and ending on August 1, 2038. Interest payments are due semiannually on February 1 and August 1 beginning February 1, 2019.

A summary of the University’s capital improvement debt payable at June 30, 2019, is presented in Table 13.

Table 13. Capital Improvement Debt Payable

Type and Series

Amount of Original

Issue

Amount Outstanding

Principal Interest Interest RatesMaturity

Date

Student Housing Auxiliary Debt: 2011A Housing $ 16,350,000 $ 5,995,000 $ 1,193,944 3.000 to 4.000% 2028

2012A Housing 26,500,000 18,840,000 4,376,181 3.000 to 4.000% 2031

2013A Housing 24,805,000 18,445,000 5,368,594 3.000 to 5.000% 2033

2016A Housing 19,390,000 16,175,000 4,117,825 3.000 to 5.000% 2030

Total Student Housing Debt 87,045,000 59,455,000 15,056,544

Parking Facility Auxiliary Debt: 2018A Parking Facility 39,070,000 39,070,000 16,659,700 4.000 to 5.000% 2038

Total Parking Garage Debt 39,070,000 39,070,000 16,659,700

Other University of Florida Revenue Bonds: 2011 Clinical Translational Research Building 29,838,000 20,199,000 5,538,923 4.433% 2030

2013 Student Activity 41,540,000 33,080,000 12,182,050 4.000 to 5.000% 2033

Total Other University of Florida Revenue Bonds 71,378,000 53,279,000 17,720,973

Plus: Unamortized Premiums -. 8,844,714 -.

Less: Unamortized Discounts -. (24,343) -.

Less: Unamortized Refunding Losses -. (1,123,956) -.

Total Capital Improvement Debt $ 197,493,000 $ 159,500,415 $ 49,437,217



Annual requirements to amortize all capital improvement debt outstanding as of June 30, 2019, are presented in Table 14.

B. LOANS AND NOTES PAYABLE

On August 30, 2013, the University borrowed $6,472,538 at an interest rate of 2.33% to finance the cost of energy savings contracts and renovation of the J. Wayne Reitz Union. The principal and interest costs are expected to be met by cost savings of the newer system. The University’s outstanding note is secured with collateral of the energy performance equipment used in the renovation. The note contains a provision that in an event of default, the contract can be terminated and equipment returned and/or declare all payments payable under the contract to the end of the then current budget year of the University, to be immediately due and payable. The note matures on August 31, 2029, and principal and interest payments are made annually. Annual requirements to amortize the note as of June 30, 2019, are presented in Table 15.

Table 15. Loans and Notes Payable – Principal & Interest

Fiscal Year Ending June 30 Principal Interest Total

2020 $ 417,839 $ 105,833 $ 523,672

2021 427,671 96,001 523,672

2022 437,734 85,938 523,672

2023 448,034 75,638 523,672

2024 458,576 65,096 523,672

2025-2029 2,459,903 158,455 2,618,358

2030 87,025 253 87,278

Total $ 4,736,782 $ 587,214 $ 5,323,996

C. INSTALLMENT PURCHASE AGREEMENTS PAYABLE

The University has entered into several installment purchase agreements for the purchase of equipment with original cost bases totaling $2,636,977. The stated interest rates ranged from 0.00% to 5.62%. Future minimum payments remaining under installment purchase agreements as of June 30, 2019, are presented in Table 16.

Table 16. Installment Purchase Agreements Payable – Principal & Interest


2020 $ 451,788 $ 3,399 $ 455,187

2021 48,300 - 48,300

Total Minimum Payments $ 500,088 $ 3,399 $ 503,487

D. CAPITAL LEASES PAYABLE

The University entered into a lease agreement with the University of Florida Foundation, Inc. (the Foundation), a direct-support organization (component unit) of the University. Under the terms of the agreement, the University agreed to lease from the Foundation a 607-space parking garage located near the Health Science Center Administrative Offices for a period of thirty years beginning July 1, 1994. Lease payments of $100,000 annually are due each July 1. Lease payments from the University to the Foundation were based on an original construction cost of $3,000,000 and no interest. For reporting purposes, the lease is considered a capital lease under GASB Statement No. 62,

Table 14. Capital Improvement Debt Payable - Principal & Interest

Fiscal YearEnding June 30 Principal Interest Total

2020 $ 9,547,000 $ 6,492,409 $ 16,039,409 2021 9,992,000 6,045,056 16,037,056 2022 10,459,000 5,574,892 16,033,892 2023 10,960,000 5,081,523 16,041,523 2024 10,587,000 4,577,830 15,164,830 2025-2029 57,927,000 15,636,179 73,563,179 2030-2034 32,592,000 5,024,328 37,616,328 2035-2039 9,740,000 1,005,000 10,745,000

Total Principal & Interest 151,804,000 49,437,217 201,241,217

Plus: Unamortized Premiums 8,844,714 -. 8,844,714 Less: Unamortized Discounts (24,343) -. (24,343)Less: Unamortized Refunding Losses (1,123,956) -. (1,123,956)

Total $ 159,500,415 $ 49,437,217 $ 208,937,632



Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. The initial obligation was discounted at an imputed interest rate of 6.45% and was recorded at $1,382,470. The asset, which is included in the Property Under Capital Lease and Leasehold Improvements, was recorded at a cost of $3,000,000.

The University entered into a lease agreement with Shands. Under the terms of the agreement, the University agreed to lease from Shands an 800-space parking garage located near the Health Science Center Administrative Offices for a period of thirty years beginning March 1, 2000. Annual lease payments of $227,167 are due each May 1, which began on May 1, 2001. Lease payment amounts were based on an original construction cost of $6,815,002 and no interest. For reporting purposes, the lease is considered a capital lease under GASB Statement No. 62. The initial obligation was discounted at an imputed interest rate of 6.45% and was recorded at $2,981,939. The asset, which is included in the Property Under Capital Lease and Leasehold Improvements, was recorded at a cost of $6,815,002. A summary of pertinent information related to the two capital leases is presented in Table 17.

Table 17. Capital Leases Payable

Capital LeasesInterest

Rate Original Balance

Outstanding

Balance

Garage No. 06 (607 spaces) 6.45% $ 1,382,470 $ 416,130

Garage No. 10 (800 spaces) 6.45% 2,981,939 1,751,111

Total $ 4,364,409 $ 2,167,241

Future minimum payments under the capital lease agreements and the present value of the minimum payments as of June 30, 2019, are presented in Table 18.

Table 18. Capital Leases Payable - Principal & Interest


2020 $ 187,380 $ 139,787 $ 327,167

2021 199,466 127,701 327,167

2022 212,331 114,835 327,166

2023 226,027 101,140 327,167

2024 240,605 86,561 327,166

2025-2029 888,030 247,806 1,135,836

2030-2031 213,402 13,764 227,166

Total $ 2,167,241 $ 831,594 $ 2,998,835

E. COMPENSATED ABSENCES PAYABLE

Employees earn the right to be compensated during absences for annual leave (vacation) and sick leave earned pursuant to Board of Governors Regulations, University Regulations, and bargaining agreements. Leave earned is accrued to the credit of

the employee and records are kept on each employee’s unpaid (unused) leave balance. The University reports a liability for the accrued leave in accordance with its policy regarding leave payment upon separation from employment. However, state noncapital appropriations fund only the portion of accrued leave that is used or paid in the current fiscal year. Although the University expects the liability to be funded primarily from future appropriations, generally accepted accounting principles do not permit the recording of a receivable in anticipation of future appropriations.

At June 30, 2019, the estimated liability for compensated absences, which includes the University’s share of the Florida Retirement System and FICA contributions, totaled $124,836,076. The current portion of the compensated absences liability is the amount expected to be paid in the coming fiscal year and is based on actual payouts over the last three years, calculated as a percentage of those years’ total compensated absences liability.

F. OTHER POSTEMPLOYMENT BENEFITS PAYABLE

The University follows GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, for certain postemployment healthcare benefits administered by the Florida Department of Management Services, Division of State Group Insurance.

General Information about the OPEB Plan

n Plan Description – The Division of State Group Insurance’s Other Postemployment Benefits Plan (OPEB Plan) is a multiple-employer defined benefit health plan administered by the State of Florida. Pursuant to the provisions of Section 112.0801, Florida Statutes, all employees who retire from the University are eligible to participate in the OPEB Plan. Retirees and their eligible dependents shall be offered the same health and hospitalization insurance coverage as is offered to active employees at a premium cost of no more than the premium cost applicable to active employees. A retiree means any officer or employee who retires under a State retirement system or State optional annuity or retirement program or is placed on disability retirement and who begins receiving retirement benefits immediately after retirement from employment. In addition, any officer or employee who retires under the Florida Retirement System Investment Plan is considered a “retiree” if he or she meets the age and service requirements to qualify for normal retirement or has attained the age of 59.5 years and has the years of service required for vesting. The University subsidizes the premium rates paid by retirees by allowing them to participate in the OPEB Plan at reduced or blended group (implicitly subsidized) premium rates for both active and retired employees. These rates provide an implicit subsidy for retirees because retiree healthcare costs are generally greater than active employee healthcare costs.



No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75. The OPEB Plan contribution requirements and benefit terms necessary for funding the OPEB Plan each year is on a pay-as-you-go basis as established by the Governor’s recommended budget and the General Appropriations Act. Retirees are required to enroll in the Federal Medicare (Medicare) program for their primary coverage as soon as they are eligible.

n Benefits Provided – The OPEB Plan provides healthcare benefits for retirees and their dependents. The OPEB Plan only provides an implicit subsidy as described above.

Proportionate Share of the Total OPEB Liability

The University’s proportionate share of the total OPEB liability of $1,043,548,000 was measured as of June 30, 2018 and was determined by applying update procedures to the actuarial valuation performed as of July 1, 2017. At June 30, 2019, the University’s proportionate share, determined by its proportion of total benefit payments made, was 9.89%, which remained the same as its proportionate share measured as of June 30, 2018.

n Actuarial Assumptions and Other Inputs – The total OPEB liability was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified, as presented in Table 19.

Table 19. Actuarial Assumptions - OPEB

Inflation 2.60%

Salary Increases 3.25% average, including inflation

Discount Rate 3.87%

Healthcare Cost Trend Rates

8.80% and 6.20%

for Preferred Provider Organizations (PPO) and Health Maintenance Organizations (HMO), respectively, for fiscal year 2019, decreasing to an ultimate rate of 3.80% for 2076 and later years

Retirees’ Share of Benefit-Related Costs

100.00% projected health insurance premiums for retirees

The discount rate was based on the Bond Buyer General Obligation 20-year Municipal Bond Index.

Mortality rates were based on the Generational RP-2000 with Projection Scale BB.

While an experience study has not been completed for the OPEB Plan, the actuarial assumptions that determined the total OPEB liability for the OPEB Plan were based on certain results of the most recent experience study for the FRS Plan.

The following changes have been made since the prior valuation:

• The discount rate as of the measurement date for GASB 75 purposes was changed to 3.87%. The prior GASB 75 report used 3.58%. The current GASB 75 discount rate is based on the 20-year municipal bond rate as of June 28, 2018.



n Sensitivity of the University’s Proportionate Share of the Total OPEB Liability to Changes in the Discount Rate – Table 20 presents the University’s proportionate share of the total OPEB liability, as well as what the University’s proportionate share of the total OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower (2.87%) or 1 percentage point higher (4.87%) than the current rate:

Table 20. Sensitivity to Changes in Discount Rate - OPEB

1% Decrease 2.87%

Current Discount Rate

3.87%1% Increase

4.87%

University’s Proportionate Share of the Total OPEB Liability $ 1,269,228,000 $ 1,043,548,000 $ 867,848,000

n Sensitivity of the University’s Proportionate Share of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates – Table 21 presents the University’s proportionate share of the total OPEB liability, as well as what the University’s proportionate share of the total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1 percentage point lower or 1 percentage point higher than the current healthcare cost trend rates:

Table 21. Sensitivity to Changes in Healthcare Cost Trend Rates - OPEB

1% Decrease

Healthcare Cost Trend

Rates 1% Increase

University’sProportionateShare of the TotalOPEB Liability $ 844,135,000 $ 1,043,548,000 $ 1,311,194,000

n OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB – For the fiscal year ended June 30, 2019, the University recognized OPEB expense of $51,272,000. At June 30, 2019, the University reported deferred outflows of resources and deferred inflows of resources related to OPEB as presented in Table 22.

Of the total amount reported as deferred outflows of resources related to OPEB, $16,164,000 resulting from transactions subsequent to the measurement date and before the end of the fiscal year will be included as a reduction of the total OPEB liability and included in OPEB expense in the year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as presented in Table 23.

Table 23. Recognition of Deferred Inflows related to OPEB

Fiscal Year Ending June 30

2020 $ (34,018,000)2021 (34,018,000)2022 (34,018,000)2023 (34,018,000)2024 (34,018,000)Thereafter (46,448,000)

Total $ (216,538,000)

G. ASSET RETIREMENT OBLIGATION PAYABLE

The University follows GASB Statement No. 83, Certain Asset Retirement Obligations, to account for significant asset retirement obligations (AROs). These AROs are included as part of Other Noncurrent Liabilities in Table 12, and the total amount of the AROs for the University was $9,482,000 as of June 30, 2019. The University’s AROs consist of radioactive and biohazardous tangible capital assets. The University utilizes governmental agency estimates and current remediation costs to estimate the AROs. The source of the obligations are federal and state regulations, and there are no legally required funding or assurance provisions associated with the AROs. There are no assets restricted for payments of the AROs. The remaining useful lives of the tangible capital assets range from 25 to 50 years. The University amortizes the associated deferred outflows of resources associated with the AROs by applying the straight-line method over the estimated remaining useful lives of the assets.

Table 22. Deferred Outflows and Inflows of Resources Related to OPEB

Description

Deferred Outflows of

ResourcesDeferred Inflows

of ResourcesRecognition

Period

Change of Assumptions $ - $ 210,137,000 8.0 years

Changes in Proportion and Differences Between University Benefit Payments and Proportionate Share of Benefit Payments - 6,401,000 8.0 years

Transactions Subsequent to the Measurement Date 16,164,000 - 1.0 year

Total $ 16,164,000 $ 216,538,000



14. Retirement Plans

A. DEFINED BENEFIT PENSION PLANS

The University follows GASB Statement No. 68, Accounting and Financial Reporting for Pensions, for reporting the employer’s proportionate share of the net pension liabilities for the FRS and HIS defined benefit plans.

General information about the Florida Retirement System and Health Insurance Subsidy Program

The Florida Retirement System (FRS) was created in Chapter 121, Florida Statutes. The FRS was created to provide a defined benefit pension plan for participating public employees. The FRS was amended in 1998 to add the Deferred Retirement Option Program (DROP) under the defined benefit plan and amended in 2000 to provide a defined contribution plan alternative to the defined benefit plan for FRS members effective July 1, 2002. This integrated defined contribution pension plan is the FRS Investment Plan. Chapter 112, Florida Statutes, established the Retiree Health Insurance Subsidy (HIS) Program, a cost-sharing multiple-employer defined benefit pension plan to assist retired members of any State-administered retirement system in paying the costs of health insurance. Chapter 121, Florida Statutes, also provides for nonintegrated, optional retirement programs in lieu of the FRS to certain members of the Senior Management Service Class (SMSC) employed by the State as well as faculty and specified employees in the State university system.

Essentially all regular employees of the University are eligible to enroll as members of the State-administered FRS. Provisions relating to the FRS are established by Chapters 121 and 122, Florida Statutes; Chapter 112, Part IV, Florida Statutes; Chapter 238, Florida Statutes; and Florida Retirement System Rules, Chapter 60S, Florida Administrative Code; wherein eligibility, contributions, and benefits are defined and described in detail. Such provisions may be amended at any time by further action from the Florida Legislature. The FRS is a single retirement system administered by the Florida Department of Management Services, Division of Retirement, and consists of two cost-sharing, multiple-employer defined benefit plans, and other nonintegrated programs. A comprehensive annual financial report of the FRS, which includes its financial statements, required supplementary information, actuarial report, and other relevant information, is available from the Florida Department of Management Services website (www.dms.myflorida.com).

The University’s pension expense totaled $107,296,432 for the 2018-19 fiscal year for both the FRS Pension Plan and HIS Program.

1. Florida Retirement System Defined Benefit Pension Plan

n Plan Description – The FRS Pension Plan (Plan) is a cost-sharing multiple-employer defined benefit pension plan, with a DROP for eligible employees. The general classes of membership are as follows:

• Regular Class – Members of the FRS who do not qualify for membership in the other classes.

• Senior Management Service Class (SMSC) – Members in senior management level positions.

• Special Risk Class – Members who are employed as law enforcement officers and meet the criteria to qualify for this class.

Employees enrolled in the Plan prior to July 1, 2011, vest at six years of creditable service, and employees enrolled in the Plan on or after July 1, 2011, vest at eight years of creditable service. All vested members enrolled prior to July 1, 2011, are eligible for normal retirement benefits at age 62, or at any age after 30 years of creditable service, except for members classified as special risk who are eligible for normal retirement benefits at age 55, or at any age after 25 years of creditable service. All vested members enrolled in the Plan on or after July 1, 2011, are eligible for normal retirement benefits at age 65, or any time after 33 years of creditable service, except for members classified as special risk who are eligible for normal retirement benefits at age 60, or at any age after 30 years of creditable service. Employees enrolled in the Plan may include up to four years of military service toward creditable service. The Plan also includes an early retirement provision; however, there is a benefit reduction for each year a member retires before his or her normal retirement date. The Plan provides retirement, disability, death benefits, and annual cost-of-living adjustments to eligible participants.

The DROP, subject to provisions of Section 121.091, Florida Statutes, permits employees eligible for normal retirement under the Plan to defer receipt of monthly benefit payments while continuing employment with an FRS-participating employer. An employee may participate in DROP for a period not to exceed 60 months after electing to participate. During the period of DROP participation, deferred monthly benefits are held in the FRS Trust Fund and accrue interest. The net pension liability does not include amounts for DROP participants, as these members are considered retired and are not accruing additional pension benefits.

n Benefits Provided – Benefits under the Plan are computed on the basis of age, and/or years of service, average final compensation, and service credit. Credit for each year of service is expressed as a percentage of the average final compensation. For members initially enrolled before July 1, 2011, the average final compensation is the average of the five highest fiscal years’ earnings; for members initially enrolled on or after July 1, 2011,



the average final compensation is the average of the eight highest fiscal years’ earnings. The total percentage value of the benefit received is determined by calculating the total value of all service, which is based on retirement plan and/or the class to which the member belonged when the service credit was earned. Members are eligible for in-line-of-duty or regular disability and survivors’ benefits. Table 24 shows the percentage value for each year of service credit earned.

Table 24. Percentage Value of Service Credit Earned per Year

Regular Class members initially enrolled before July 1, 2011

Retirement up to age 62 or up to 30 years of service 1.60%

Retirement at age 63 or with 31 years of service 1.63%

Retirement at age 64 or with 32 years of service 1.65%

Retirement at age 65 or with 33 or more years of service 1.68%

Regular Class members initially enrolled on or after July 1, 2011

Retirement up to age 65 or up to 33 years of service 1.60% Retirement at age 66 or with 34 years of service 1.63% Retirement at age 67 or with 35 years of service 1.65%

Retirement at age 68 or with 36 or more years of service 1.68%

Senior Management Service Class 2.00%

Special Risk Class Service on and after October 1, 1974 3.00%

As provided in Section 121.101, Florida Statutes, if the member was initially enrolled in the Plan before July 1, 2011, and all service credit was accrued before July 1, 2011, the annual cost-of-living adjustment is 3.00% per year. If the member was initially enrolled before July 1, 2011, and has service credit on or after July 1, 2011, there is an individually calculated cost-of-living adjustment. The annual cost-of-living adjustment is a proportion of 3.00%, determined by dividing the sum of the pre-July 2011 service credit by the total service credit at retirement, multiplied by 3.00%. Plan members initially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment after retirement.

n Contributions – The Florida Legislature establishes contribution rates for participating employers and employees. Contribution rates during the 2018-19 fiscal year are shown

in Table 25. The University’s contributions to the Plan totaled $50,296,368 for the fiscal year ended June 30, 2019.

Table 25. Florida Retirement System Contribution Rates

Percent of Gross Salary

Class Employee Employer (A)

Florida Retirement System, Regular 3.00% 8.26%

Florida Retirement System, Senior Management Service 3.00% 24.06%

Florida Retirement System, Special Risk 3.00% 24.50%Deferred Retirement Option Program- Applicable to Members from all of the Above Classes 0.00% 14.03%

Florida Retirement System, Reemployed Retiree (B) (B)

(A) Employer rates for each membership class include 1.66% for Health Insurance Subsidy. Also, employer rates, other than for DROP participants, include 0.06% for administrative costs of the Investment Plan.

(B) Contribution Rates are dependent upon retirement class in which reemployed.

n Pension Liabilities, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions – At June 30, 2019, the University reported a liability of $487,417,535 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2018. The University’s proportionate share of the net pension liability was based on the University’s 2017-18 fiscal year contributions relative to the total 2017-18 fiscal year contributions of all participating members. At June 30, 2018, the University’s proportionate share was 1.62%, which was an increase of 0.09% from its proportionate share of 1.53% measured as of June 30, 2017.

For the year ended June 30, 2019, the University recognized pension expense of $94,358,933. At June 30, 2019, the University reported deferred outflows of resources and deferred inflows of resources related to pensions as presented in Table 26.

Table 26. Deferred Outflows and Inflows Related to Pensions - FRS

Description


ResourcesDeferred Inflows

of ResourcesRecognition

Period

Differences Between Expected and Actual Experience $ 41,291,592 $ 1,498,691 6.4 years

Change of Assumptions 159,264,347 - 6.4 years

Net Difference Between Projected and Actual Earnings on FRS Plan Investments - 37,658,947 5.0 years

Changes in Proportion and Difference Between University Contributions and Proportionate Share of Contributions 26,589,305 4,661,914 6.4 years

University FRS Contributions Subsequent to the Measurement Date 50,296,368 - 1.0 year

Total $ 277,441,612 $ 43,819,552



The deferred outflows of resources related to pensions totaling $50,296,368, resulting from University contributions subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ending June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as shown in Table 27.

Table 27. Recognition of Deferred Outflows and Inflows Related to Pensions - FRS


2020 $ 73,143,420

2021 47,829,714

2022 7,588,377

2023 29,913,979

2024 21,095,554

Thereafter 3,754,648

Total $ 183,325,692

n Actuarial Assumptions – The total pension liability in the July 1, 2018, actuarial valuation was determined using the following actuarial assumptions applied to all periods included in the measurement, as presented in Table 28.

Table 28. Actuarial Assumptions - FRS

Inflation 2.60%


Investment Rate of Return 7.00% net of pension Plan investment expense, including inflation


The actual assumptions, used in the July 1, 2018, valuation, were based on the results of an actuarial experience study for the period July 1, 2008, through June 30, 2013.

The long-term expected rate of return on Plan investments was not based on historical returns, but instead was based on a forward-looking capital market economic model. The allocation policy’s description of each asset class was used to map the target allocation to the asset classes shown below. Each asset class assumption was based on a consistent set of underlying assumptions and includes an adjustment for the inflation assumption. The target allocation and best estimates of long-term expected rates of arithmetic return for each major asset class are summarized in Table 29.

Table 29. Target Allocation and Expected Rate of Return

Asset Class Target Allocation

Long-Term Expected Rate of

Return

Cash 1.00% 2.90%

Fixed Income 18.00% 4.40%

Global Equity 54.00% 7.60%

Real Estate (Property) 11.00% 6.60%

Private Equity 10.00% 10.70%

Strategic Investments 6.00% 6.00%

Total 100.00%

n Discount Rate – The discount rate used to measure the total pension liability was 7.00%, which was a decrease of 0.10% from the prior measurement date. The Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculating the total pension liability is equal to the long-term expected rate of return.



n Sensitivity of the University’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate – Table 30 presents the University’s proportionate share of the net pension liability calculated using the discount rate of 7.00%, as well as what the University’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.00%) or 1 percentage point higher (8.00%) than the current rate.

Table 30. Sensitivity to Changes in Discount Rate - FRS

1% Decrease 6.00%


7.00%1% Increase

8.00%

University’s Proportionate Share of the Net Pension Liability $ 889,557,445 $ 487,417,535 $ 153,416,566

n Pension Plan Fiduciary Net Position – Detailed information about the Plan’s fiduciary net position is available in the separately issued FRS Pension Plan and Other State Administered Systems Comprehensive Annual Financial Report.

2. Health Insurance Subsidy Defined Benefit Pension Plan

n Plan Description – The HIS Pension Plan (HIS Plan) is a cost-sharing multiple-employer defined benefit pension plan established under Section 112.363, Florida Statutes. The benefit is a monthly payment to assist retirees of State-administered retirement systems in paying their health insurance costs and is administered by the Division of Retirement within the Florida Department of Management Services.

n Benefits Provided – For the fiscal year ended June 30, 2019, eligible retirees and beneficiaries received a monthly HIS payment equal to the number of years of creditable service completed at the time of retirement, multiplied by $5. The payments are at least $30, but not more than $150 per month, pursuant to Section 112.363, Florida Statutes. To be eligible to receive a HIS Plan benefit, a retiree under a State-administered retirement system must provide proof of health insurance coverage, which can include Medicare.

n Contributions – The HIS Plan is funded by required contributions from FRS participating employers, as set by the Florida Legislature. Employer contributions are a percentage of gross compensation for all active FRS members. For the fiscal year ended June 30, 2019, the contribution rate was 1.66% of payroll pursuant to Section 112.363, Florida Statues. The University contributed 100% of its statutorily required contributions for the current and preceding three years. HIS Plan contributions are deposited in a separate trust fund from which HIS payments are

authorized. HIS Plan benefits are not guaranteed and are subject to annual legislative appropriation. In the event the legislative appropriation or available funds fail to provide full subsidy benefits to all participants, benefits may be reduced or canceled. The University’s contributions to the HIS Plan totaled $8,250,927 for the fiscal year ended June 30, 2019.

n Pension Liabilities, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions – At June 30, 2019, the University reported a liability of $156,700,718 for its proportionate share of the net pension liability. The current portion of the net pension liability is the University’s proportionate share of benefit payments expected to be paid within 1 year, net of the University’s proportionate share of the HIS Plan’s fiduciary net position available to pay that amount. The net pension liability was measured as of June 30, 2018. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2018. The University’s proportionate share of the net pension liability was based on the University’s 2017-18 fiscal year contributions relative to the total 2017-18 fiscal year contributions of all participating members. At June 30, 2018, the University’s proportionate share was 1.48%, which was an increase of 0.01% from its proportionate share of 1.47% measured as of June 30, 2017.

For the fiscal year ended June 30, 2019, the University recognized pension expense of $12,937,499. In addition, the University reported deferred outflows of resources and deferred inflows of resources related to pensions as presented in Table 31.

Table 31. Deferred Outflows and Inflows Related to Pensions - HIS

Description


Resources

Deferred Inflows of Resources

Recognition

Period

Differences Between Expected and Actual Experience $ 2,399,019 $ 266,229 7.2 years

Change of Assumptions 17,427,056 16,567,710 7.2 years

Net Difference Between Projected and Actual Earnings on Plan Investments 94,588 - 5.0 yearsChanges in Proportion and Difference Between University Contributions and Proportionate Share of Contributions 4,260,399 - 7.2 yearsUniversity Contributions Subsequent to the Measurement Date 8,250,927 - 1.0 year

Total $ 32,431,989 $ 16,833,939

The deferred outflows of resources related to pensions totaling $8,250,927, resulting from University contributions subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ending



June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as shown in Table 32.

Table 32. Recognition of Deferred Outflows and Inflows Related to Pensions - HIS


2020 $ 3,433,642 2021 3,425,668 2022 2,469,504 2023 744,791 2024 (1,929,936)Thereafter (796,546)

Total $ 7,347,123

n Actuarial Assumptions – The total pension liability in the July 1, 2018, actuarial valuation was determined using the following actuarial assumptions applied to all periods included in the measurement, as presented in Table 33.

Table 33. Actuarial Assumptions - HIS

Inflation 2.60%


Municipal Bond Rate 3.87%


While an experience study had not been completed for the HIS Plan, the actuarial assumptions that determined the total pension liability for the HIS Plan were based on certain results of the most recent experience study for the FRS Plan.

n Discount Rate – The discount rate used to measure the total pension liability was 3.87%, which was an increase of 0.29% from the prior measurement date. In general, the discount rate for calculating the total pension liability is equal to the single rate equivalent to discounting at the long-term expected rate of return for benefit payments prior to the projected depletion date. Because the HIS benefit is essentially funded on a pay-as-you-go basis, the depletion date is considered to be immediate, and the single equivalent discount rate is equal to the municipal bond rate selected by the plan sponsor. The Bond Buyer General Obligation 20-Bond Municipal Bond Index was adopted as the applicable municipal bond index.

n Sensitivity of the University’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate – Table 34 presents the University’s proportionate share of the net pension liability calculated using the discount rate of 3.87%, as well as what the University’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (2.87%) or 1 percentage point higher (4.87%) than the current rate.

Table 34. Sensitivity to Changes in Discount Rate - HIS

1% Decrease 2.87%


3.87%1% Increase

4.87%

University’s Proportionate Share of the Net Pension Liability $ 178,472,935 $ 156,700,718 $ 138,552,312

n Pension Plan Fiduciary Net Position – Detailed information about the HIS Plan’s fiduciary net position is available in the separately issued FRS Pension Plan and Other State Administered Systems Comprehensive Annual Financial Report.

B. DEFINED CONTRIBUTION PENSION PLANS

1. FRS Investment Plan

The State Board of Administration (SBA) administers the defined contribution plan officially titled the FRS Investment Plan (Investment Plan). The Investment Plan is reported in the SBA’s annual financial statements and in the State’s Comprehensive Annual Financial Report.

As provided in Section 121.4501, Florida Statutes, eligible FRS members may elect to participate in the Investment Plan in lieu of the FRS defined benefit plan. University employees already participating in the State University System Optional Retirement Program or DROP are not eligible to participate in this program. Employer and employee contributions are defined by law, but the ultimate benefit depends in part on the performance of investment funds. Service retirement benefits are based upon the value of the member’s account upon retirement. Benefit terms, including contribution requirements, are established and may be amended by the Florida Legislature. The Investment Plan is funded with the same employer and employee contributions as the FRS defined benefit plan; these contributions are based on salary and membership class (Regular Class, Senior Management Service Class, etc.). Contributions are directed to individual member accounts, and the individual members allocate contributions and account balances among various approved investment choices. Costs of administering the Investment Plan, including the FRS Financial Guidance Program, are funded through an employer contribution of 0.06% of payroll and by forfeited benefits of plan members. Allocations to the Investment Plan member investment accounts during the 2018-19 fiscal year are presented in Table 35.

Table 35. Florida Retirement System - Investment Plan Rates

Class

Percent of Gross

Compensation

Florida Retirement System, Regular 6.30%

Florida Retirement System, Senior Management Service 7.67%

Florida Retirement System, Special Risk 14.00%



For all membership classes, employees are immediately vested in their own contributions and are vested after one year of service for employer contributions and investment earnings.

If an accumulated benefit obligation for service credit originally earned under the FRS Pension Plan is transferred to the FRS Investment Plan, the member must have the years of service required for FRS Pension Plan vesting (including the service credit represented by the transferred funds) to be vested for these funds and the earnings on the funds. Non-vested employer contributions are placed in a suspense account for up to five years. If the employee returns to FRS-covered employment within the five-year period, the employee will regain control over his or her account. If the employee does not return within the five-year period, the employee will forfeit the accumulated account balance. For the fiscal year ended June 30, 2019, the information for the amount of forfeitures was unavailable from the SBA; however, management believes these amounts, if any, would be immaterial to the University.

After termination and applying to receive benefits, the member may roll over vested funds to another qualified plan, structure a periodic payment under the Investment Plan, receive a lump-sum distribution, leave the funds invested for future distribution, or select any combination of these options. Disability coverage is provided in which the member may either transfer the account balance to the FRS Pension Plan when approved for disability retirement to receive guaranteed lifetime monthly benefits under the FRS Pension Plan or remain in the Investment Plan and rely upon that account balance for retirement income.

There were 2,461 University participants during the 2018-19 fiscal year. The University’s Investment Plan pension expense totaled $9,250,746 for the fiscal year ended June 30, 2019.

2. State University System Optional Retirement Program

Section 121.35, Florida Statutes, provides for an Optional Retirement Program (Program) for eligible university instructors and administrators. The Program is designed to aid State universities in recruiting employees by offering more portability to employees not expected to remain in the FRS for eight or more years.

The Program is a defined contribution plan, which provides full and immediate vesting of all contributions submitted to the participating investment companies on behalf of the participant. Employees in eligible positions can make an irrevocable election to participate in the Program, rather than the FRS, and purchase retirement and death benefits

through contracts provided by certain insurance carriers. The employing university contributes 5.14% of the participant’s salary to the participant’s account, 3.50% to cover the unfunded actuarial liability of the FRS pension plan, and 0.01% to cover administrative costs. Employees contribute 3.00% of their salary. Additionally, the employee may contribute, by payroll deduction, an amount not to exceed the percentage contributed by the University to the participant’s annuity account. The contributions are invested in the company or companies selected by the participant to create a fund for the purchase of annuities at retirement.

There were 7,083 University participants during the 2018-19 fiscal year. The University’s contributions to the Program totaled $47,506,868 and employee contributions totaled $28,785,212 for the 2018-19 fiscal year.

C. OTHER RETIREMENT PROGRAMS

1. U.S. Civil Service Retirement System

Some University employees participate in the U.S. Civil Service Retirement System. Fourteen employees were covered by the U.S. Civil Service Retirement System during the 2018-19 fiscal year. Employer contributions totaled $85,156, and employee contributions totaled $85,156 for the 2018-19 fiscal year. The University’s participation in the Federal retirement system is not considered material by University management.

2. Institute of Food and Agricultural Sciences Supplemental Retirement

In 1984, the Florida Legislature enacted the Institute of Food and Agricultural Sciences Supplemental Retirement Act to provide a supplement to the monthly retirement benefit being paid under the Federal Civil Service Retirement System to retirees of the Institute of Food and Agricultural Sciences (IFAS) at the University of Florida. The supplement is designated for IFAS cooperative extension employees employed before July 1, 1983, who are not entitled to benefits from either a State-supported retirement system or social security based on their service with IFAS. It was intended to compensate these IFAS employees for the difference between their Civil Service benefit and the benefits an FRS member receives, which includes a social security benefit. No additional persons can become eligible for this supplement.

There were 14 University participants during the 2018-19 fiscal year. Required employer contributions made to the program totaled $247,906. Employees do not contribute to this program.



16. State Self-Insurance Programs

The University is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Pursuant to Section 1001.72(2), Florida Statutes, the University participates in State self-insurance programs providing insurance for property and casualty, workers’ compensation, general liability, fleet automotive liability, Federal Civil Rights, and employment discrimination liability. During the 2018-19 fiscal year, for property losses, the State retained the first $2 million per occurrence for all perils except named windstorm and flood. The State retained the first $2 million of losses per occurrence with an annual aggregate retention of $40 million for named windstorm and flood losses. After the annual aggregate retention, losses in excess of $2 million per occurrence were commercially insured up to $78 million for named windstorm and flood losses through February 14, 2019, and decreased to $68.5 million starting February 15, 2019. For perils other than named windstorm and flood, losses in excess of $2 million per occurrence were commercially insured up to $225 million; losses exceeding those amounts were retained by the State. No excess insurance coverage is provided for workers’ compensation, general and automotive liability, Federal Civil Rights, and employment action coverage; all losses in these categories are completely self-insured by the State through the State Risk Management Trust Fund established pursuant to Chapter 284, Florida Statutes. Payments on tort claims are limited to $200,000 per person and $300,000 per occurrence as set by Section 768.28(5), Florida Statutes. Calculation of premiums considers the cash needs of the program and the amount of risk exposure for each participant. Settlements have not exceeded insurance coverage during the past three fiscal years.

Pursuant to Section 110.123, Florida Statutes, University employees may obtain healthcare services through participation in the State’s group health insurance plan or through membership in a health maintenance organization plan under contract with the State. The State’s risk financing activities associated with State group health insurance, such as risk of loss related to medical and prescription drug claims, are administered through the State Employees Group Health Insurance Trust Fund. It is the practice of the State not to purchase commercial coverage for the risk of loss covered by this Fund. Additional information on the State’s group health insurance plan, including the actuarial report, is available from the Florida Department of Management Services, Division of State Group Insurance.

17. University Self-Insurance Programs

The University of Florida Self-Insurance Program (the Program) and the University of Florida Healthcare Education Insurance Company (HEIC), which are included in the University’s reporting entity as discretely presented component units (see Note 1), provide general and professional liability protection for the University of Florida Board of Trustees (UFBOT) on behalf of the six health colleges of the JHMHC, the College of Veterinary Medicine teaching hospitals, the Student Health Care Center, direct-support organizations, and their employees and agents. Hospital professional liability protection, including general liability, is provided to Shands Teaching Hospital and Clinics, Inc., Shands Jacksonville Medical Center, Inc. (a subsidiary of Shands Jacksonville HealthCare, Inc.-Shands Jacksonville), other entities statutorily authorized to participate in the Program, and their employees and agents. The Program

Table 36. Construction Commitments

Project Title Total Commitment Completed to Date Balance Committed

Data Science and Information Technology Building $ 135,000,000 $ 30,306 $ 134,969,694

Herbert Wertheim Laboratory for Engineering Excellence 72,316,512 34,957,489 37,359,023

Norman Hall Rehabilitation and College of Education Center Addition 34,107,603 21,845,084 12,262,519

Parking Garage XIV 32,596,599 17,002,087 15,594,512

PK Yonge Middle & High School Expansion 28,000,000 1,227,072 26,772,928

VetMed Plant Energy Services Contract 25,227,148 5,390,923 19,836,225

Institute of Black Culture and Institute of Hispanic-Latino Cultures Facility 9,871,048 4,549,039 5,322,009

Florida Museum of Natural History Special Collections Building 8,000,000 19,868 7,980,132

Museum Road Utility Infrastructure Replacement 6,200,001 110,200 6,089,801

Electrical Substation 2 - Cable and Switchgear Replacement 6,010,163 3,496,574 2,513,589

Subtotal 357,329,074 88,628,642 268,700,432

Projects Under $5,000,000 82,433,754 32,231,610 50,202,144

Total $ 439,762,828 $ 120,860,252 $ 318,902,576

15. Construction Commitments

The University’s construction commitments at June 30, 2019, are presented in Table 36.



and HEIC are distinct from and entirely independent of the self-insurance programs administered by the State described in Note 16.

The UFBOT and other immune entities are protected for losses which are subject to Section 768.28, Florida Statutes, including legislative claims bills, that in combination with the waiver of immunity limits described in Section 768.28, Florida Statutes, do not exceed $1 million per claim and, for voluntary settlements, $2 million per claim. For those protected entities not subject to Section 768.28, Florida Statutes, the Program provides $2 million per claim. The per claim limit of liability protection for the participants does not exceed $2 million per claim in the event more than one protected entity is involved in the same claim or action.

HEIC provides coverage for claims that are in excess of the protections provided by the Program, at limits of $4 million per legislative claims bill coverage for participants subject to Section 768.28, Florida Statutes.

18. Litigation and Contingencies

The University is involved in certain pending and threatened legal actions. The range of potential loss from all such claims and actions, as estimated by the University’s legal counsel and management, should not materially affect the University’s financial position.

19. Functional Distribution of Operating Expenses

The functional classification of operating expenses (instruction, research, etc.) is assigned to each individual transaction based on the nature of the activity. The operating expenses on the Statement of Revenues, Expenses, and Changes in Net Position are presented by natural classification. Table 37 presents those same expenses in functional classification as recommended by NACUBO.

Table 37. Functional Expenses

Functional ClassificationInstruction $ 770,462,514

Public Service 742,136,550

Research 707,179,550

Academic Support 213,650,423

Institutional Support 180,500,202

Scholarships, Fellowships, and Waivers, Net 163,122,183

Depreciation 143,105,891

Auxiliary Enterprises 133,984,814

Operation and Maintenance of Plant 132,511,197

Student Services 46,800,757

Total Operating Expenses $ 3,233,454,081

20. Component Units

The University’s financial statements include 17 discretely presented component units as discussed in Note 1. These component units comprise 100% of the transactions and account balances of the aggregate discretely presented component units columns of the financial statements. Summary financial information from the most recently available audited financial statements for these component units is presented on the following pages in Tables 38, 39, and 40.

21. Segment Information

A segment is defined as an identifiable activity (or grouping of activities) that has one or more bonds or other debt instruments outstanding, with a revenue stream pledged in support of that debt. In addition, the activity’s related revenues, expenses, gains, losses, assets, and liabilities are required to be accounted for separately. Transportation and Parking Services provides the University with safe and adequate parking facilities. Several parking garages have been constructed from the proceeds of revenue-backed debt instruments. The Department of Housing and Residence Education provides safe and affordable living space for students of the University of Florida. Capital improvement debt has been issued over the years to provide funding for the construction of facilities to house students of the University. In accordance with GASB Codification Section 2500.701-3, the University is no longer including activities related to Transportation Fees and Student Traffic Court in the segment note which will affect the comparability of the note to prior years. A summary of the financial activity for these segments is presented in Table 41.



Table 38. Direct-Support Organizations (amounts expressed in thousands)


Foundation, Inc.

The University Athletic

Association, Inc.

University of Florida Research

Foundation, Inc.

GatorCare Health Management

Corporation

CONDENSED STATEMENT OF NET POSITION

Assets

Due from Component Units/University $ 30,732 $ 4,662 $ 164,330 $ 4,608

Other Current Assets 98,272 90,874 10,948 40,292

Capital Assets, Net 62,134 204,574 -. 7

Other Noncurrent Assets 1,912,152 78,915 - 7,922

Total Assets 2,103,290 379,025 175,278 52,829

Liabilities

Due to Component Units/University 40,460 -. 57,884 18,464

Other Current Liabilities 5,716 87,726 10,860 21,453

Noncurrent Liabilities 44,906 122,303 - 10,013

Total Liabilities 91,082 210,029 68,744 49,930


Deferred Amounts Related to Pensions 432 -. -. -.

Other Deferred Outflows 19,140 - - -

Total Liabilities and Deferred Inflows of Resources 110,654 210,029 68,744 49,930

Net Position

Net Investment in Capital Assets 60,117 106,262 -. 7

Restricted-Nonexpendable Endowment 1,361,918 - -. -.

Restricted-Expendable Endowment 552,492 - -. -.

Restricted-Expendable Other -. 8,271 -. -.

Unrestricted 18,109 54,463 106,534 2,892

Total Net Position $ 1,992,636 $ 168,996 $ 106,534 $ 2,899

CONDENSED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION

Operating Revenues $ 107,095 $ 151,450 $ 83,733 $ 971

Operating Expenses (169,749) (142,677) (81,566) (1,078)

Operating Income (Loss) (62,654) 8,773 2,167 (107)

Nonoperating Revenues (Expenses) and Other Revenues,Expenses, Gains, or Losses

Investment Income, Net of Expenses 117,631 5,154 2 1,675

Net Increase in the Fair Value of Investments 1,102 - 11 -.

Other Nonoperating Revenues -. 6,366 2,300 -.

Other Nonoperating Expenses -. (7,048) -. -.

Addition to Permanent Endowments 53,823 - - -

Change in Net Position 109,902 13,245 4,480 1,568

Net Position, Beginning of Year 1,965,510 155,751 102,054 1,331

Adjustments to Beginning Net Position (Note 3) (82,776) - - -

Net Position, Beginning of Year, as Restated 1,882,734 155,751 102,054 1,331

Net Position, End of Year $ 1,992,636 $ 168,996 $ 106,534 $ 2,899



Table 38. Direct-Support Organizations (amounts expressed in thousands)

Florida Foundation Seed Producers, Inc.

University of Florida Development

CorporationGator

Boosters, Inc.

Citrus Research and Development

Foundation, Inc.

Total Direct-Support

Organizations

$ - $ - $ 2,458 $ - $ 206,790

14,828 2,368 3,102 4,043 264,727

3,356 9,688 1 -. 279,760

-. -. 492 -. 1,999,481

18,184 12,056 6,053 4,043 2,750,758

-. 4,444 4,663 -. 125,915

8,546 286 235 138 134,960

-. -. 110 -. 177,332

8,546 4,730 5,008 138 438,207

-. -. -. -. 432

-. -. -. -. 19,140

8,546 4,730 5,008 138 457,779

3,356 5,244 1 -. 174,987

-. -. 492 -. 1,362,410

-. -. -. -. 552,492

-. -. -. 3,462 11,733

6,282 2,082 552 443 191,357

$ 9,638 $ 7,326 $ 1,045 $ 3,905 $ 2,292,979

$ 1,601 $ 1,889 $ 40,234 $ 5,879 $ 392,852

(1,260) (2,286) (3,905) (10,298) (412,819)

341 (397) 36,329 (4,419) (19,967)

156 -. 1,706 124 126,448

-. -. -. -. 1,113

40 -. -. 4,000 12,706

-. (4,444) (38,037) -. (49,529)

-. -. 5 -. 53,828

537 (4,841) 3 (295) 124,599

9,101 12,167 1,042 4,200 2,251,156

-. -. -. -. (82,776)

9,101 12,167 1,042 4,200 2,168,380

$ 9,638 $ 7,326 $ 1,045 $ 3,905 $ 2,292,979



Table 39. Health Science Center Affiliates (amounts expressed in thousands)

Florida Clinical

Practice Association,

Inc.


Jacksonville Physicians,

Inc.

Faculty Associates,

Inc.

Florida Veterinary

Medicine Faculty

Association, Inc.

University of Florida College

of Pharmacy Faculty

Practice Association,

Inc.

Total Health

Science Center

Affiliates


Assets

Due from Component Units/University $ 30,642 $ 18,560 $ 1,500 $ 1,372 $ - $ 52,074

Other Current Assets 129,569 55,856 21,079 4,394 811 211,709

Capital Assets, Net 83,902 26,339 - - - 110,241

Other Noncurrent Assets 33,546 -. -. -. -. 33,546

Total Assets 277,659 100,755 22,579 5,766 811 407,570

Liabilities

Due to Component Units/University 15,794 927 -. 3,357 -. 20,078

Other Current Liabilities 10,584 24,037 297 522 705 36,145

Noncurrent Liabilities 91,212 7,116 -. -. -. 98,328

Total Liabilities 117,590 32,080 297 3,879 705 154,551

Net Position

Net Investment in Capital Assets 14,754 18,333 -. -. -. 33,087

Unrestricted 145,315 50,342 22,282 1,887 106 219,932

Total Net Position $ 160,069 $ 68,675 $ 22,282 $ 1,887 $ 106 $ 253,019


Operating Revenues $ 692,058 $ 293,362 $ 20,675 $ 15,746 $ 6,746 $ 1,028,587

Operating Expenses (189,746) (145,578) (391) (722) (6,406) (342,843)

Operating Income 502,312 147,784 20,284 15,024 340 685,744

Nonoperating Revenues (Expenses)

Investment Income, Net of Expenses 842 410 4 -. -. 1,256

Net Decrease in the Fair Value of Investments (3,432) -. -. -. -. (3,432)

Other Nonoperating Expenses (499,129) (150,433) (17,524) (16,123) (2,634) (685,843)

Change in Net Position 593 (2,239) 2,764 (1,099) (2,294) (2,275)

Net Position, Beginning of Year 159,476 70,914 19,518 2,986 2,400 255,294

Net Position, End of Year $ 160,069 $ 68,675 $ 22,282 $ 1,887 $ 106 $ 253,019



Table 40. Shands Hospital and Others (amounts expressed in thousands)

Shands Teaching Hospital

& Clinics, Inc.

Shands Jacksonville

HealthCare, Inc.


Self-Insurance Program


Healthcare Education Insurance Company

Total Shands

Hospital and Others


Assets

Due from Component Units/University $ 45,723 $ 7,048 $ - $ 57,805 $ 110,576

Other Current Assets 450,884 252,127 223,827 1,314 928,152

Capital Assets, Net 1,081,668 249,153 - - 1,330,821

Other Noncurrent Assets 679,788 40,976 - - 720,764

Total Assets 2,258,063 549,304 223,827 59,119 3,090,313

Deferred Outflows of Resources

Deferred Amounts Related to Pensions 67,181 4,028 - - 71,209

Deferred Amounts Related to OPEB - 1,829 - - 1,829

Other Deferred Outflows 51,125 176 - - 51,301

Total Assets and Deferred Outflows of Resources 2,376,369 555,337 223,827 59,119 3,214,652

Liabilities

Due to Component Units/University 10,642 38,812 57,804 - 107,258

Other Current Liabilities 287,711 92,184 8,597 2 388,494

Noncurrent Liabilities 865,915 227,471 23,419 2,645 1,119,450

Total Liabilities 1,164,268 358,467 89,820 2,647 1,615,202


Deferred Amounts Related to Pensions 23,378 3,331 - - 26,709

Deferred Amounts Related to OPEB - 510 - - 510

Other Deferred Inflows 2,325 3,101 - - 5,426

Total Liabilities and Deferred Inflows of Resources 1,189,971 365,409 89,820 2,647 1,647,847

Net Position

Net Investment in Capital Assets 263,659 43,600 - - 307,259

Restricted-Nonexpendable Endowment 276 - - - 276

Restricted-Expendable Endowment 4,205 4,793 - - 8,998

Other Restricted Net Position - - 134,007 56,472 190,479

Unrestricted 918,258 141,535 - - 1,059,793

Total Net Position $ 1,186,398 $ 189,928 $ 134,007 $ 56,472 $ 1,566,805


Operating Revenues $ 1,600,792 $ 753,681 $ 10,045 $ 722 $ 2,365,240

Operating Expenses (1,482,863) (717,352) (10,950) (1,322) (2,212,487)

Operating Income (Loss) 117,929 36,329 (905) (600) 152,753


Investment Income, Net of Expenses 39,919 2,023 13,071 4,346 59,359

Net Increase in the Fair Value of Investments 6,288 - - - 6,288

Other Nonoperating Revenues 17,975 183 - - 18,158

Other Nonoperating Expenses (100,810) (42,093) - - (142,903)

Change in Net Position 81,301 (3,558) 12,166 3,746 93,655

Net Position, Beginning of Year 1,105,097 193,486 121,841 52,726 1,473,150

Net Position, End of Year $ 1,186,398 $ 189,928 $ 134,007 $ 56,472 $ 1,566,805



Table 41. Segment Information

Transportation and Parking Services

Department of Housing

and Residence Education


Assets

Current Assets $ 19,826,279 $ 11,684,026

Capital Assets, Net 60,524,647 116,275,609

Other Noncurrent Assets - 376,072

Total Assets 80,350,926 128,335,707

Liabilities

Current Liabilities 4,230,908 8,770,677

Noncurrent Liabilities 42,661,396 52,429,658

Total Liabilities 46,892,304 61,200,335

Net Position

Net Investment in Capital Assets 16,051,223 59,285,951

Restricted 1,785,575 2,175,176

Unrestricted 15,621,824 5,674,245

Total Net Position $ 33,458,622 $ 67,135,372


Operating Revenues (Expenses)

Operating Revenues $ 15,838,909 $ 56,544,387

Depreciation Expense (2,144,666) (7,332,026)

Other Operating Expenses (6,664,009) (45,230,046)

Operating Income 7,030,234 3,982,315


Investment Income 64,635 -

Interest on Capital Asset-Related Debt (1,419,651) (2,555,159)

Other Nonoperating Revenues (Expenses) (13,725,348) 1,418,959

Net Nonoperating Revenues (Expenses) (15,080,364) (1,136,200)

Change in Net Position (8,050,130) 2,846,115

Net Position, Beginning of Year 41,508,752 64,289,257

Net Position, End of Year $ 33,458,622 $ 67,135,372

CONDENSED STATEMENT OF CASH FLOWS

Net Cash Provided (Used) by

Operating Activities $ 8,757,609 $ 10,942,575

Noncapital Financing Activities (4,784,079) (9,687,618)

Capital and Related Financing Activities 12,911,562 (59,049)

Investing Activities (16,885,092) (10,248,134)

Net Decrease in Cash and Cash Equivalents - (9,052,226)

Cash and Cash Equivalents, Beginning of Year - 9,052,226

Cash and Cash Equivalents, End of Year $ - $ -



F O R T H E F I S C A L Y E A R E N D E D J U N E 3 0 , 2 0 1 9

OTHER REQUIRED SUPPLEMENTARY INFORMATION


OTHER REQUIRED SUPPLEMENTARY INFORMATION

Schedule of University’s Proportionate Share of the Total Other Postemployment Benefits Liability

2018 (1) (3) 2017 (1) (2) 2016 (1)

University’s Proportion of the OPEB Liability 9.89% 9.89% 9.92%

University's Proportionate Share of the Total OPEB Liability $ 1,043,548,000 $ 1,069,104,000 $ 1,171,492,000University’s Covered Payroll $ 1,151,732,866 $ 1,103,905,001 $ 1,120,515,686University’s Proportionate Share of the Total OPEB Liability as a Percentage of Covered Payroll

90.61% 96.85% 104.55%

Notes:

(1) The amounts presented for the fiscal year were determined as of June 30. No assets are accumulated in a trust that meets the criteria in paragraph 4, GASB Statement No. 75 to pay related benefits.

(2) The University’s proportionate share of the total OPEB liability significantly decreased from the prior fiscal year due to changes to benefits and assumptions, resulting from adjustments to active mortality rates, updates to HMO and PPO healthcare claims costs, changes in retiree contributions, change in trend rates, and a change in the discount rate of return.

(3) The University’s proportionate share of the total OPEB liability significantly decreased from the prior fiscal year due to changes in the discount rate of return.

Schedule of University’s Proportionate Share of the Net Pension Liability - Florida Retirement System (FRS) Defined Benefit Pension Plan

2018 (1) (6) 2017 (1) (5) 2016 (1) (4) 2015 (1) (2) 2014 (1) (3) 2013 (1)

University’s Proportion of the FRS Net Pension Liability 1.62% 1.53% 1.56% 1.59% 1.52% 1.23%

University’s Proportionate Share of the FRS Net Pension Liability $ 487,417,535 $ 453,912,167 $ 393,639,963 $ 204,919,550 $ 92,657,576 $ 212,307,108

University’s Covered Payroll (7) $ 1,151,732,866 $ 1,103,905,001 $ 1,120,515,686 $ 1,066,940,109 $ 1,024,891,028 $ 1,053,555,913

University’s Proportionate Share of the FRS Net Pension Liability as a Percentage of Covered Payroll 42.32% 41.12% 35.13% 19.21% 9.04% 20.15%

FRS Plan Fiduciary Net Position as a Percentage of the FRS Total Pension Liability 84.26% 83.89% 84.88% 92.00% 96.09% 88.54%

Notes:

(1) The amounts presented for each fiscal year were determined as of June 30.

(2) There were no changes in assumptions from the prior fiscal year.

(3) Changes of assumptions - As of June 30, 2014, the inflation rate assumption was decreased from 3.00% to 2.60%, the real payroll growth assumption was decreased from 1.00% to 0.65%, and the overall payroll growth rate assumption was decreased from 4.00% to 3.25%. The long-term expected rate of return decreased from 7.75% to 7.65%.

(4) Changes of assumptions - As of June 30, 2016, the long-term expected rate of return decreased from 7.65% to 7.60%.

(5) Change of assumptions - As of June 30, 2017, the long-term expected rate of return decreased from 7.60% to 7.10%.

(6) Change of assumptions - As of June 30, 2018, the long-term expected rate of return decreased from 7.10% to 7.00%.

(7) Covered payroll includes active employees who are members of the following plans: defined benefit, Investment Plan, State University Optional Retirement Program, and DROP because total employer contributions are determined on a uniform basis (blended rate) as required by Part III of Chapter 121, Florida Statutes.



Schedule of University Contributions - Florida Retirement System (FRS) Defined Benefit Pension Plan

2019 (1) 2018 (1) 2017 (1) 2016 (1) 2015 (1) 2014 (1)

Contractually Required FRS Contribution

$ 50,296,368 $ 46,118,091 $ 39,948,341 $ 38,017,855 $ 38,680,557 $ 33,264,015

FRS Contributions in Relation to the Contractually Required FRS Contribution (50,296,368) (46,118,091) (39,948,341) (38,017,855) (38,680,557) (33,264,015)

Contribution Deficiency (Excess) $ - $ - $ - $ - $ - $ -

University’s Covered Payroll (2) $ 1,188,019,133 $ 1,151,732,866 $ 1,103,905,001 $ 1,120,515,686 $ 1,066,940,109 $ 1,024,891,028

FRS Contributions as a Percentage of Covered Payroll 4.23% 4.00% 3.62% 3.39% 3.63% 3.25%

Notes:

(1) The amounts presented for each fiscal year were determined as of June 30.

(2) Covered payroll includes active employees who are members of the following plans: defined benefit, Investment Plan, State University Optional Retirement Program, and DROP because total employer contributions are determined on a uniform basis (blended rate) as required by Part III of Chapter 121, Florida Statutes.

Schedule of University’s Proportionate Share of the Net Pension Liability - Health Insurance Subsidy (HIS) Defined Benefit Pension Plan

2018 (1) (6) 2017 (1) (5) 2016 (1) (4) 2015 (1) (3) 2014 (1) (2) 2013 (1)

University’s Proportion of the HIS Net Pension Liability 1.48% 1.47% 1.47% 1.46% 1.41% 1.38%

University’s Proportionate Share of the HIS Net Pension Liability $ 156,700,718 $ 157,259,112 $ 171,404,762 $ 148,825,945 $ 131,969,507 $ 120,063,826

University’s Covered Payroll (7) $ 442,718,057 $ 431,629,539 $ 435,952,174 $ 413,619,247 $ 396,471,815 $ 382,427,384

University’s Proportionate Share of the HIS Net Pension Liability as a Percentage of Covered Payroll 35.40% 36.43% 39.32% 35.98%

33.29%

31.40%

HIS Plan Fiduciary Net Position as a Percentage of the HIS Total Pension Liability 2.15% 1.64% 0.97% 0.50% 0.99% 1.78%

Notes:(1) The amounts presented for each fiscal year were determined as of June 30.

(2) Change of assumption - The municipal rate used to determine total pension liability decreased from 4.63% to 4.29%.



(5) Change of assumption - The municipal rate used to determine total pension liability increased from 2.85% to 3.58%.

(6) Change of assumption - The municipal rate used to determine total pension liability increased from 3.58% to 3.87%.

(7) Covered payroll includes active employees who are members of the following plans: defined benefit, Investment Plan, and DROP.

Schedule of University Contributions - Health Insurance Subsidy (HIS) Defined Benefit Pension Plan

2019 (1) 2018 (1) 2017 (1) 2016 (1) 2015 (1) 2014 (1)

Contractually Required HIS Contribution $ 8,250,927 $ 8,028,939 $ 7,783,620 $ 7,538,309 $ 5,578,364 $ 4,834,988

HIS Contributions in Relation to the Contractually Required HIS Contribution (8,250,927) (8,028,939) (7,783,620) (7,538,309) (5,578,364) (4,834,988)

Contribution Deficiency (Excess) $ - $ - $ - $ - $ - $ -

University’s Covered Payroll (2) $ 452,884,926 $ 442,718,057 $ 431,629,539 $ 435,952,174 $ 413,619,247 $ 396,471,815

HIS Contributions as a Percentage of Covered Payroll 1.82% 1.81% 1.80% 1.73% 1.35% 1.22%

Notes:(1) The amounts presented for each fiscal year were determined as of June 30.

(2) Covered payroll includes active employees who are members of the following plans: defined benefit, Investment Plan, and DROP.


Phone: (850) 412-2722Fax: (850) 488-6975

Sherrill F. Norman, CPAAuditor General

AUDITOR GENERALSTATE OF FLORIDAClaude Denson Pepper Building, Suite G74

111 West Madison StreetTallahassee, Florida 32399-1450

The President of the Senate, the Speaker of theHouse of Representatives, and the

Legislative Auditing Committee

INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVERFINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMEDIN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the University of Florida, a component unit of the State of Florida, and its aggregate discretely presented component units as of and for the fiscal year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the University’s basic financial statements, and have issued our report thereon dated February 6, 2020, included under the heading INDEPENDENT AUDITOR’S REPORT. Our report includes a reference to other auditors who audited the financial statements of the aggregate discretely presented component units, as described in our report on the University’s financial statements. This report does not include the results of the other auditors’ testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the University’s internal control over financial reporting (internal control) to determine audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the University’s internal control. Accordingly, we do not express an opinion on the effectiveness of the University’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weaknessis a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the University’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the University’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, rules, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.


Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the University’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the University’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Respectfully submitted,

Sherrill F. Norman, CPATallahassee, FloridaFebruary 6, 2020Audit Report No. 2020-114



University of Florida Board of Trustees

MICHAEL C. MURPHY Student Body President

RAHUL PATEL

ROBERT G. STERN

MORI HOSSEINIChair

RAY G. THOMASFaculty Senate Chair

DAVID L. BRANDON

ANITA G. ZUCKER

THOMAS G. KUNTZ Vice Chair

MARSHA D. POWERS

JAMES W. HEAVENER

DR. JASON J. ROSENBERG

LEONARD H. JOHNSON

DANIEL T. O’KEEFE


P R I N C I PA L F I N A N C E A N D A C C O U N T I N G O F F I C I A L S

U N I V E R S I T Y O F F L O R I D A C A B I N E T

Elias G. Eldayrie Vice President and

Chief Information Officer

Zina L. Evans Vice President for Enrollment

Management and Associate Provost

Antonio Farias Chief Diversity Officer and

Senior Advisor to the President

Jodi Gentry Vice President for Human Resources

Dr. Joseph Glover Provost and Senior Vice President for

Academic Affairs

Amy M. Hass Vice President and

General Counsel

Edward Jimenez CEO, UF Health

Shands

Mark Kaplan Vice President for Government and

Community Relations

Dr. Charles E. Lane Senior Vice President and Chief Operating Officer

Michael V. McKee Vice President and

Chief Financial Officer

Thomas J. Mitchell Vice President for

Advancement

Dr. David R. Nelson Senior Vice President for Health Affairs

President, UF Health

Dr. David P. Norton Vice President for Research

Nancy E. Paton Vice President for Strategic

Communications and Marketing

Dr. Jack M. Payne Senior Vice President for

Agriculture and Natural Resources

Dr. Win Phillips Executive Chief of Staff

Interim Vice President for Student Affairs

Curtis Reynolds Vice President for Business Affairs

Scott Stricklin Director of Athletics

Alan M. West Assistant Vice President and University Controller

Bradley W. Bennett Senior Associate Controller for University Bursar,

Treasury Management, and Payroll and Tax Services

Ruth Harris Senior Associate Controller for Disbursements,

Asset Management, Cost Analysis, and Construction Accounting

Dr. W. Kent Fuchs President


Alan M. West, Assistant Vice President and University ControllerPost Office Box 113200, Tigert Hall, Room 207, Gainesville, FL 32611-3200 | [email protected]

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